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3 Mutual Fund Misfires to Avoid - January 06, 2020

Zacks Equity Research

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.

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.

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Hartford Global Real Asset R5 (HRLTX): This fund has an expense ratio of 0.95% and a management fee of 0.85%. 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. HRLTX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Templeton Foreign R (TEFRX): 1.33% expense ratio, 0.69% management fee. TEFRX 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 an annual returns of -1.04% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Snow Capital Small Cap Value Institutional (SNWIX) - 1.25% expense ratio, 0.95% management fee. SNWIX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. SNWIX has generated annual returns of -0.84% over the last five years. Ouch!

3 Top Ranked Mutual Funds

Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.

Janus Henderson Enterprise N (JDMNX) is a winner, with an expense ratio of just 0.66% and a five-year annualized return track record of 14.98%.

Hartford Stock HLS IB (HIBSX) is a stand out fund. HIBSX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. With five-year annualized performance of 11.52% and expense ratio of 0.77%, this diversified fund is an attractive buy with a strong history of performance.

JPMorgan Small Cap Growth Fund R6 (JGSMX) has an expense ratio of 0.74% and management fee of 0.65%. JGSMX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. With annual returns of 14.09% over the last five years, this fund is a well-diversified fund with a long track record of success.

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