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Are You Invested In These 3 Mutual Fund Misfires? - November 07, 2019

Zacks Equity Research

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess 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.

Putnam Dynamic Risk Allocation M (PDRTX): Expense ratio: 1.65%. Management fee: 0.72%. After expenses, the 5 year return is 1.63%, meaning your fees are far higher than the fund's returns.

JPMorgan International Value Fund A (JFEAX). Expense ratio: 1.01%. Management fee: 0.72%. Over the last 5 years, this fund has generated annual returns of -1.4%.

Ivy Cundill Global Value C (ICDCX): Expense ratio: 2.13%. Management fee: 1%. ICDCX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. With annual returns of just -1.45%, 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.

Great-West Multi Manager Large Cap Growth (MXLGX) is a fund that has an expense ratio of 1%, and a management fee of 0.64%. 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 yearly returns of 12.99% over the last five years, this fund clearly wins.

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 that typically features a portfolio filled with stocks of various sizes and styles; it allows for a diversification strategy focusing on companies with market caps between $2 billion and $10 billion. With annual returns of 11.94% over the last five years, this is a well-diversified fund with a long track record of success.

Oppenheimer Discovery I (ODIIX) has an expense ratio of 0.67% and management fee of 0.63%. ODIIX 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 11.48% 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).

If you have concerns or any doubts about your investment advisor, read our just-released report:

4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future


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