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3 Mutual Fund Misfires to Avoid - March 16, 2020

Zacks Equity Research
3 Mutual Fund Misfires to Avoid - March 16, 2020

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 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.

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.

Touchstone Ultra Short Duration Fixed Income C (TSDCX): 1.19% expense ratio and 0.25% management fee. TSDCX is a Government Bond - Short fund option. These funds hold securities issued by the U.S. federal government in their portfolios, and focus on the short end of the curve, which results in lower yields. With a five year after-costs return of -0.19%, you're for the most part paying more in charges than returns.

Brandes International Small Cap Equity C (BINCX). Expense ratio: 2.1%. Management fee: 0.25%. Over the last 5 years, this fund has generated annual returns of 1.2%.

BTS Tactical Fixed Income C (BTFCX) - 2.24% expense ratio, 1% management fee. This fund has yielded yearly returns of 1.05% in the course of the last five years. Too bad!

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.

American Funds AMCAP R2E (RAEBX): Expense ratio: 1.15%. Management fee: 0.3%. RAEBX 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 10.21%.

MSIF International Advantage A (MFAPX) has an expense ratio of 1.28% and management fee of 0.8%. MFAPX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. With annual returns of 13.54% over the last five years, this is a well-diversified fund with a long track record of success.

Davenport Small Cap Focus Fund (DSCPX) is an attractive fund with a five-year annualized return of 10.67% and an expense ratio of just 0.96%. DSCPX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities.

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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