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Mutual Fund Misfires of the Market - February 10, 2020

Zacks Equity Research
·4 min read

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.

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.

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.

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Goldman Sachs Dynamic Allocation R (GDRFX): 1.4% expense ratio and 0.79% management fee. GDRFX 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. With a five year after-expenses return of 0.03%, you're mostly paying more in fees than returns.

MainGate MLP Fund C (MLCPX): MLCPX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. MLCPX offers an expense ratio of 2.45% and annual returns of -8.32% 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.

Intrepid Endurance Fund Investor (ICMAX) - 1.36% expense ratio, 1% management fee. This fund has yielded yearly returns of 0.93% 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.

Dreyfus Appreciation Fund Y (DGYGX) is a fund that has an expense ratio of 0.59%, and a management fee of 0.55%. DGYGX 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 11.22% over the last five years, this fund clearly wins.

Fidelity Series Blue Chip Growth (FSBDX): Expense ratio: 0.02%. Management fee: 0%. FSBDX 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. FSBDX has managed to produce a robust 15.52% over the last five years.

Janus Henderson Enterprise N (JDMNX) has an expense ratio of 0.66% and management fee of 0.64%. JDMNX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With yearly returns of 14.59% 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