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3 Mutual Fund Misfires to Avoid - December 18, 2019

Zacks Equity Research

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.

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.

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.

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Catalyst Hedged Futures Strategy C (HFXCX): 3.08% expense ratio and 1.75% management fee. HFXCX is a Long Short - Equity fund, and these funds aim to minimize exposure to the broader market, 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 -4.82%, you're for the most part paying more in charges than returns.

Wells Fargo International Equity C (WFEFX): 2.15% expense ratio, 0.85%. WFEFX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has yearly returns of 1.71% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Brookfield Global Listed Infrastructure C (BGLCX): This fund has an expense ratio of 2.1% and management fee of 0.85%. BGLCX 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 an annual average return of 0.34% 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

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.

JPMorgan Small Cap Growth Fund R6 (JGSMX): Expense ratio: 0.74%. Management fee: 0.65%. JGSMX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. This fund has achieved five-year annual returns of an astounding 14.09%.

T. Rowe Price Science & Technology Adviser (PASTX) has an expense ratio of 1.06% and management fee of 0.64%. PASTX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. Thanks to yearly returns of 15.53% over the last five years, PASTX is an effectively diversified fund with a long reputation of solidly positive performance.

Janus Henderson Enterprise N (JDMNX) has an expense ratio of 0.66% and management fee of 0.64%. JDMNX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With yearly returns of 14.98% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

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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Zacks Investment Research