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Are You Invested In These 3 Mutual Fund Misfires? - February 10, 2020

Zacks Equity Research

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.

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.

AllianzGI Global Natural Resources P (APGPX): Expense ratio: 1.18%. Management fee: 1.15%. After expenses, the 5 year return is -2.6%, meaning your fees are far higher than the fund's returns.

MainGate MLP Fund I (IMLPX). Expense ratio: 1.45%. Management fee: 1.15%. Over the last 5 years, this fund has generated annual returns of -7.4%.

MainStay International Opportunities C (MYICX): This fund has an expense ratio of 2.57% and management fee of 1.1%. MYICX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. With an annual average return of 1.15% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.

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.

Fidelity Series Growth Company (FCGSX): Expense ratio: 0.01%. Management fee: 0%. FCGSX 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. This fund has achieved five-year annual returns of an astounding 16.18%.

Franklin International Growth R6 (FILRX): Expense ratio: 0.66%. Management fee: 0.75%. FILRX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. FILRX has managed to produce a robust 10.61% over the last five years.

AQR Large Cap Defensive Style R6 (QUERX): Expense ratio: 0.3%. Management fee: 0.25%. QUERX 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. QUERX has produced a 13.51% over the last five years.

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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