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Mutual Fund Misfires of the Market - March 02, 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.

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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CGM Focus Fund (CGMFX): This fund has an expense ratio of 1.28% and a management fee of 0.98%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. CGMFX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Federated Fund for US Government Security C (FUSCX). Expense ratio: 1.72%. Management fee: 0.98%. Over the last 5 years, this fund has generated annual returns of 1.15%.

Columbia Disciplined Small Core T (SSCEX) - 1.35% expense ratio, 0.85% management fee. This fund has yielded yearly returns of 1.34% 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.

Commerce Mid Cap Growth (CFAGX): Expense ratio: 0.81%. Management fee: 0.5%. CFAGX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. This fund has achieved five-year annual returns of an astounding 12.35%.

MassMutual Premier Disciplined Growth Admiral (MPGLX) is a stand out fund. MPGLX 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 five-year annualized performance of 12.62% and expense ratio of 0.85%, this diversified fund is an attractive buy with a strong history of performance.

PIMCO StocksPLUS Admiral (PPLAX) has an expense ratio of 0.75% and management fee of 0.5%. PPLAX 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 yearly returns of 11.3% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

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Zacks Investment Research