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.
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.
American Century Short Duration Inflation Protected R (APORX): This fund has an expense ratio of 1.07% and a management fee of 0.56%. 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. APORX is a Government - Bonds fund, which holds securities issued by the U.S. federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Touchstone Ultra Short Duration Fixed Income Y (TSYYX): 0.44% expense ratio, 0.25%. TSYYX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. This fund has yearly returns of -0.26% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Janus Henderson Europe Focus A (HFEAX): Expense ratio: 1.31%. Management fee: 0.93%. HFEAX is a Europe - Equity mutual fund investing in stocks across the vast European continent. With annual returns of just -3.56%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Virtus KAR Small-Cap Core A (PKSAX): 1.29% expense ratio and 0.75% management fee. PKSAX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. With an annual return of 16.29% over the last five years, this fund is a winner.
Fidelity Advisor Semiconductors A (FELAX): Expense ratio: 1.14%. Management fee: 0.54%. FELAX is part of the Sector - Tech mutual fund category that invests in technology and lets investors own a stake in a notoriously volatile sector, but with a much more diversified approach. FELAX has managed to produce a robust 17.68% over the last five years.
T. Rowe Price Mid-Cap Growth R (RRMGX) has an expense ratio of 1.27% and management fee of 0.61%. RRMGX 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. With yearly returns of 12.58% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
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