Avoid These 3 Mutual Fund Misfires - November 04, 2019

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.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.

Leader Short-Term Bond Fund A (LCAMX): Expense ratio: 1.66%. Management fee: 0.75%. After expenses, the 5 year return is -0.6%, meaning your fees are far higher than the fund's returns.

MSIF Active International Allocation L (MSLLX). Expense ratio: 1.73%. Management fee: 0.75%. Over the last 5 years, this fund has generated annual returns of 0.97%.

Lord Abbett Inflation Focused I (LIFIX) - 0.48% expense ratio, 0.3% management fee. This fund has yielded yearly returns of 0.05% in the course of the last five years. Too bad!

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.

ClearBridge Dividend Strategy 1 (LCBOX) is a winner, with an expense ratio of just 0.77% and a five-year annualized return track record of 10.33%.

AQR Large Cap Defensive Style I (AUEIX) has an expense ratio of 0.4% and management fee of 0.25%. AUEIX 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. Thanks to yearly returns of 13.91% over the last five years, AUEIX is an effectively diversified fund with a long reputation of solidly positive performance.

Frontier MFG Global Equity Institutional (FMGEX) has an expense ratio of 0.8% and management fee of 0.8%. FMGEX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. With yearly returns of 10.91% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

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