3 Mutual Fund Misfires to Avoid - November 11, 2019
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.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.
Invesco Gold & Precious Metals A (IGDAX): This fund has an expense ratio of 1.47% and a management fee of 0.75%. 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. IGDAX is classified as a Sector - Precious Metal fund, and these mutual funds invest in stocks with a focus on the mining and production of precious metals like gold, silver, platinum, and palladium. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Dreyfus Emerging Markets I (DRPEX): DRPEX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. DRPEX offers an expense ratio of 1.75% and annual returns of 0.14% 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.
Touchstone Ultra Short Duration Fixed Income C (TSDCX) - 1.19% expense ratio, 0.25% management fee. This fund has yielded yearly returns of -0.26% in the course of the last five years. Too bad!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Fidelity Advisor Semiconductors M (FELTX) is a fund that has an expense ratio of 1.46%, and a management fee of 0.54%. FELTX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. With yearly returns of 17.8% over the last five years, this fund clearly wins.
JPMorgan Intrepid Growth I (JPGSX) has an expense ratio of 0.59% and management fee of 0.5%. JPGSX 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 annual returns of 11.23% over the last five years, this is a well-diversified fund with a long track record of success.
Principal Mid Cap Growth III R4 (PPQSX) is an attractive fund with a five-year annualized return of 10.09% and an expense ratio of just 1.29%. PPQSX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.