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Avoid These 3 Mutual Fund Misfires - March 13, 2020

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If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your advisor.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each day.

Below, you'll read about some of the funds included in our current list of "Mutual Fund Misfires of the Market." And if by chance you're invested in any of these misfires, we'll help and review some of our highest Zacks Ranked mutual funds.

3 Mutual Fund Misfires

Now, let's take a look at three market misfires.

James Alpha Multi-StrtgyAltIncFd I : 3.14% expense ratio and 2% management fee. JAIMX 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. With a five year after-costs return of 1.89%, you're for the most part paying more in charges than returns.

Invesco Macro Allocation Strategy C (GMSEX - Free Report) : GMSEX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. GMSEX offers an expense ratio of 2.12% and annual returns of 1.69% 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.

Camelot Excalibur Small Cap Income A : This fund has an expense ratio of 3.04% and management fee of 1%. CEXAX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With an annual average return of 1.61% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.

3 Top Ranked Mutual Funds

There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.

City Natural Rochdale US Core Equity & Income Institutional (CNRUX - Free Report) : Expense ratio: 0.52%. Management fee: 0.4%. CNRUX 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. This fund has achieved five-year annual returns of an astounding 12.55%.

Russell Select US Equity Y (RTDYX - Free Report) is a stand out fund. RTDYX 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. With five-year annualized performance of 10.99% and expense ratio of 0.37%, this diversified fund is an attractive buy with a strong history of performance.

Janus Henderson Enterprise T (JAENX - Free Report) has an expense ratio of 0.91% and management fee of 0.64%. JAENX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With annual returns of 14.32% over the last five years, this fund is a well-diversified fund with a long track record of success.

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.

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