Avoid These 3 Mutual Fund Misfires - December 03, 2019

You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.

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.

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.

MSIF Active International Allocation L (MSLLX): Expense ratio: 1.73%. Management fee: 0.65%. After expenses, the 5 year return is 0.97%, meaning your fees are far higher than the fund's returns.

361 Managed Futures Strategy Investor (AMFQX): AMFQX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. AMFQX offers an expense ratio of 2.14% and annual returns of 1.28% 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.

Templeton Global Balanced Fund A (TAGBX): Expense ratio: 1.2%. Management fee: 0.73%. TAGBX 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. With annual returns of just 0%, 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.

Frontier MFG Global Equity Institutional (FMGEX): 0.8% expense ratio and 0.8% management fee. FMGEX 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. With an annual return of 10.91% over the last five years, this fund is a winner.

Great-West Multi Manager Large Cap Growth (MXLGX) is a stand out fund. MXLGX 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. With five-year annualized performance of 12.99% and expense ratio of 1%, this diversified fund is an attractive buy with a strong history of performance.

Hartford Stock HLS IB (HIBSX) has an expense ratio of 0.77% and management fee of 0.48%. HIBSX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of 11.52% 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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