Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - September 27, 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.
How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.
Barings Global Credit Income Opportunities C (BXICX): Expense ratio: 1.95%. Management fee: 0.75%. Total annual fee: 2.7%. After expenses, the 5 year return is 1.83%, meaning your fees are far higher than the fund's returns.
Western Asset Short DurationHiInc R (LWSRX). Expense ratio: 1.4%. Management fee: 0.75%. Over the last 5 years, this fund has generated annual returns of 1.54%, while charging total fees of 3. 73%. LWSRX is a High Yield - Bonds fund. Often referred to as junk bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers.
Janus Henderson Short Term Bond T (JASBX): This fund has an expense ratio of 0.73% and management fee of 0.55%. JASBX 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 an annual average return of 1.2% over the last five years and an annual fee of 1.28%, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
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.
MFS Mass Investors Growth Stock R3 (MIGHX): 0.73% expense ratio, 0.33% management fee, for a total annual fee of 1.06%. MIGHX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With combined management fees and expenses of just 1.06% and annual returns of 12.71% over the last five years, this fund is a winner.
Dreyfus/Boston Small/Mid-Cap Growth Y (DBMYX) has an expense ratio of 0.63% and management fee of 0.6%, for a total annual fee of 1.23%. DBMYX 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 combined management fees and expenses of just 1.23% and annual returns of 12.57% over the last five years, this is a well-diversified fund with a long track record of success.
Hirtle Callaghan Institutional Growth Equity HCS (HCIGX): Expense ratio: 0.23%. Management fee: 0.17%. Total annual fee: 0.4%. HCIGX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. HCIGX has produced a 13.2% over the last five years.
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.
If you have concerns or any doubts about your investment advisor, read our just-released report:
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