3 Mutual Fund Misfires to Avoid - October 09, 2019

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your advisor.

High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.

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.

ClearBridge International Small Cap I (LCOIX): 1.07% expense ratio and 0.8% management fee. LCOIX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With a five year after-costs return of -0.21%, you're for the most part paying more in charges than returns.

JPMorgan Inflation Managed Bond A (JIMAX): 0.75% expense ratio, 0.35% management fee. JIMAX is classified as a Government - Bonds fund. These funds hold securities issued by the U.S. federal government in their portfolios, and focus across the curve, meaning the yields and interest rate sensitivity will vary. This fund has an annual returns of 0.24% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Leader Short-Term Bond Fund A (LCAMX): Expense ratio: 1.66%. Management fee: 0.75%. LCAMX is an Investment Grade Bond - Short fund. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. With annual returns of just -0.36%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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 Growth Portfolio I (MSEQX): 0.56% expense ratio and 0.41% management fee. MSEQX 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 an annual return of 17.65% over the last five years, this fund is a winner.

Nationwide Growth R6 (MUIGX): Expense ratio: 0.65%. Management fee: 0.6%. MUIGX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. MUIGX has managed to produce a robust 11.91% over the last five years.

Janus Henderson Enterprise D (JANEX) has an expense ratio of 0.81% and management fee of 0.64%. JANEX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. With annual returns of 14.34% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.

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