3 Mutual Fund Misfires to Avoid - November 15, 2019
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 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.
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.
Hartford Global Real Asset R4 (HRLSX): 1.2% expense ratio and 0.85% management fee. HRLSX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With a five year after-costs return of -1.82%, you're for the most part paying more in charges than returns.
Janus Henderson Emerging Markets I (HEMIX): 1.15% expense ratio, 1% management fee. HEMIX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has an annual returns of 0.64% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Victory INCORE Low Duration Bond K (RLDKX): Expense ratio: 1.27%. Management fee: 0.45%. RLDKX is an Investment Grade Bond - Short option; these funds focus on the short end of the curve, generally with bonds that mature in less than two years. With annual returns of just 1.03%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Principal Equity Income I (PEIIX) is a fund that has an expense ratio of 0.52%, and a management fee of 0.51%. PEIIX is a Large Cap Value mutual fund, which invests in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. With yearly returns of 10.17% over the last five years, this fund clearly wins.
Eagle Mid Cap Growth R5 (HARSX): Expense ratio: 0.74%. Management fee: 0.52%. HARSX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. HARSX has managed to produce a robust 11.78% over the last five years.
John Hancock2 Real Estate Securities 1 (JIREX) is an attractive fund with a five-year annualized return of 10.91% and an expense ratio of just 0.8%. Sector - Real Estate funds like JIREX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation.
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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