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Avoid These 3 Mutual Fund Misfires - January 10, 2020

Zacks Equity Research

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.

High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.

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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Janus Henderson Europe Focus C (HFECX): Expense ratio: 2.06%. Management fee: 0.93%. After expenses, the 5 year return is -3.23%, meaning your fees are far higher than the fund's returns.

Hotchkis and Wiley Mid-Cap Value C (HWMCX): HWMCX is a Mid Cap Value mutual funds that aims to target medium-sized companies that possess strong value and income opportunities for investors. HWMCX offers an expense ratio of 2% and annual returns of -0.95% 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.

JPMorgan Research Market Neutral A (JMNAX) - 3.66% expense ratio, 0.8% management fee. This fund has yielded yearly returns of -0.79% in the course of the last five years. Too bad!

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.

T. Rowe Price Institutional Small-Cap Stock (TRSSX): 0.66% expense ratio and 0.65% management fee. TRSSX is a Small Cap Blend mutual fund, allowing investors a way to diversify their funds among various types of small-cap stocks. With an annual return of 11.99% over the last five years, this fund is a winner.

Vanguard Tax-Managed Cap Appreciation Admiral (VTCLX) has an expense ratio of 0.09% and management fee of 0.08%. VTCLX 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. Thanks to yearly returns of 10.83% over the last five years, VTCLX is an effectively diversified fund with a long reputation of solidly positive performance.

Hartford Mid Cap Fund HLS IA (HIMCX) has an expense ratio of 0.7% and management fee of 0.66%. HIMCX is a Mid Cap Blend mutual fund, and usually features a portfolio with stocks of various styles and sizes, allowing for diversification within a strategy that focuses on mid cap companies. With yearly returns of 11.37% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.

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Zacks Investment Research