You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.
First, let's break down some of the funds currently part of our "Mutual Fund Misfires of the Market." If you happen to have put your money into any of these misfires, we'll help assess some of our best Zacks Ranked mutual funds.
3 Mutual Fund Misfires
Now, let's take a look at three market misfires.
Harding Loevner Front Emerging Markets Investor (HLMOX): Expense ratio: 2%. Management fee: 1.35%. After expenses, the 5 year return is -1.02%, meaning your fees are far higher than the fund's returns.
Ascendant Deep Value Convertibles C (AEQCX): 3.15% expense ratio, 1.15%. AEQCX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. This fund has yearly returns of -0.19% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Janus Henderson Diversified Alternatives T - 1.29% expense ratio, 1% management fee. This fund has yielded yearly returns of 0.48% in the course of the last five years. Too bad!
3 Top Ranked Mutual Funds
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
MSIF Global Opportunity Portfolio I (MGGIX): 0.92% expense ratio and 0.74% management fee. MGGIX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With an annual return of 17.99% over the last five years, this fund is a winner.
MassMutual Select Equity Opportunities I (MFVZX): Expense ratio: 0.74%. Management fee: 0.69%. MFVZX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. MFVZX has managed to produce a robust 10.84% over the last five years.
Janus Henderson Research N (JRANX) has an expense ratio of 0.54% and management fee of 0.56%. JRANX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. With annual returns of 12.36% over the last five years, this fund is a well-diversified fund with a long track record of success.
These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).
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