Avoid These 3 Mutual Fund Misfires - November 28, 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.
Lord Abbett Inflation Focused F (LIFFX): Expense ratio: 0.58%. Management fee: 0.3%. After expenses, the 5 year return is -0.14%, meaning your fees are far higher than the fund's returns.
Putnam Dynamic Risk Allocation M (PDRTX): 1.65% expense ratio, 0.72%. PDRTX 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. This fund has yearly returns of 1.63% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Legg Mason BW Absolute Return Opportunity I (LROIX) - 0.85% expense ratio, 0.64% management fee. LROIX is part of the Investment Grade Bond - Intermediate fund group. These mutual funds focus on the middle part of the curve, generally with bonds that usually mature in more than three years but less than 15 years. LROIX has generated annual returns of 0.71% over the last five years. Ouch!
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.
Janus Henderson Global Technology D (JNGTX): Expense ratio: 0.84%. Management fee: 0.64%. JNGTX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. This fund has achieved five-year annual returns of an astounding 18.78%.
AB Large Cap Growth Adviser (APGYX) is a stand out fund. APGYX 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 14.68% and expense ratio of 0.63%, this diversified fund is an attractive buy with a strong history of performance.
Hartford Core Equity C (HGICX) is an attractive fund with a five-year annualized return of 11.15% and an expense ratio of just 1.48%. HGICX 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.
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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