3 Mutual Fund Misfires to Avoid - October 24, 2019
If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your 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.
JPMorgan International Value Fund R6 (JNVMX): This fund has an expense ratio of 0.55% and a management fee of 0.6%. 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. JNVMX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
AMG SouthernSun Small Cap I (SSSIX). Expense ratio: 1%. Management fee: 0.6%. Over the last 5 years, this fund has generated annual returns of 0.74%.
AB Allocation Market Real Return K (AMTKX) - 1.27% expense ratio, 0.75% management fee. AMTKX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. AMTKX has generated annual returns of -2.67% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Neuberger Berman Real Estate Fund R3 (NRERX) is a winner, with an expense ratio of just 1.46% and a five-year annualized return track record of 10.31%.
MFS Mid-Cap Growth Fund R2 (MCPRX) has an expense ratio of 1.38% and management fee of 0.71%. MCPRX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. Thanks to yearly returns of 13.26% over the last five years, MCPRX is an effectively diversified fund with a long reputation of solidly positive performance.
MassMutual Select Small Cap Growth Equity I (MSGZX) has an expense ratio of 0.86% and management fee of 0.8%. MSGZX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. With annual returns of 10.65% over the last five years, this fund is a well-diversified fund with a long track record of success.
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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