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Are You Invested In These 3 Mutual Fund Misfires? - October 18, 2019

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.

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.

America First Income Trends I (AFPIX): 1.59% expense ratio and 1.25% management fee. AFPIX is classified as a Diversified Bonds fund, which offers exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. With a five year after-expenses return of 0.03%, you're mostly paying more in fees than returns.

AB Allocation Market Real Return 2 (AMTTX): 0.81% expense ratio, 0.75% management fee. AMTTX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. This fund has an annual returns of -2.27% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Virtus Equity Trend A (VAPAX) - 1.56% expense ratio, 1% management fee. This fund has yielded yearly returns of 0.59% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.

MSIF Global Opportunity Portfolio I (MGGIX): 0.92% expense ratio and 0.74% management fee. MGGIX 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 15.67% over the last five years, this fund is a winner.

VY T. Rowe Price Diversified Mid Cap Growth S2 (IAXTX) has an expense ratio of 1.18% and management fee of 0.74%. IAXTX 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 annual returns of 11.94% over the last five years, this is a well-diversified fund with a long track record of success.

AT Disciplined Equity Fund (AWEIX) has an expense ratio of 0.75% and management fee of 0.66%. AWEIX 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 yearly returns of 11.72% 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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