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3 Mutual Fund Misfires to Avoid - February 17, 2020
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Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.
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.
AQR Equity Market Neutral I (QMNIX - Free Report) : This fund has an expense ratio of 1.27% and a management fee of 1.1%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. QMNIX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Invesco Long/Short Equity Y : LSQYX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. LSQYX offers an expense ratio of 1.33% and annual returns of 0.33% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.
Eaton Vance Short Duration Government Income C (ECLDX - Free Report) - 1.45% expense ratio, 0.5% management fee. ECLDX is a Government Mortgage - Short mutual fund; these funds focus on the mortgage-backed securities (MBS) market and specifially, securities that have less than three years until maturity. ECLDX has generated annual returns of 0.87% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
American Funds Growth Fund of America 529F (CGFFX - Free Report) is a fund that has an expense ratio of 0.47%, and a management fee of 0.27%. CGFFX 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 yearly returns of 12.55% over the last five years, this fund clearly wins.
MassMutual Select Equity Opportunities R3 (MFVNX - Free Report) has an expense ratio of 1.44% and management fee of 0.69%. MFVNX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of 10.07% over the last five years, this is a well-diversified fund with a long track record of success.
Loomis Sayles Small Cap Growth Retail (LCGRX - Free Report) is an attractive fund with a five-year annualized return of 11.23% and an expense ratio of just 1.19%. LCGRX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities.
Bottom Line
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
Image: Bigstock
3 Mutual Fund Misfires to Avoid - February 17, 2020
Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.
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.
AQR Equity Market Neutral I (QMNIX - Free Report) : This fund has an expense ratio of 1.27% and a management fee of 1.1%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. QMNIX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Invesco Long/Short Equity Y : LSQYX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. LSQYX offers an expense ratio of 1.33% and annual returns of 0.33% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.
Eaton Vance Short Duration Government Income C (ECLDX - Free Report) - 1.45% expense ratio, 0.5% management fee. ECLDX is a Government Mortgage - Short mutual fund; these funds focus on the mortgage-backed securities (MBS) market and specifially, securities that have less than three years until maturity. ECLDX has generated annual returns of 0.87% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
American Funds Growth Fund of America 529F (CGFFX - Free Report) is a fund that has an expense ratio of 0.47%, and a management fee of 0.27%. CGFFX 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 yearly returns of 12.55% over the last five years, this fund clearly wins.
MassMutual Select Equity Opportunities R3 (MFVNX - Free Report) has an expense ratio of 1.44% and management fee of 0.69%. MFVNX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of 10.07% over the last five years, this is a well-diversified fund with a long track record of success.
Loomis Sayles Small Cap Growth Retail (LCGRX - Free Report) is an attractive fund with a five-year annualized return of 11.23% and an expense ratio of just 1.19%. LCGRX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities.
Bottom Line
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.