Mutual Fund Misfires of the Market - December 02, 2019
Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.
High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
Intrepid Endurance Fund Institutional (ICMZX): Expense ratio: 1.15%. Management fee: 1%. After expenses, the 5 year return is 0.06%, meaning your fees are far higher than the fund's returns.
Touchstone Ultra Short Duration Fixed Income C (TSDCX). Expense ratio: 1.19%. Management fee: 1%. Over the last 5 years, this fund has generated annual returns of -0.26%.
Templeton Emerging Markets Small Cap Adviser (TEMZX) - 1.67% expense ratio, 1.35% management fee. This fund has yielded yearly returns of 1.06% in the course of the last five years. Too bad!
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.
BMO Low Volatility Equity I (MLVEX): 0.65% expense ratio and 0.5% management fee. MLVEX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With an annual return of 10.13% over the last five years, this fund is a winner.
City Natural Rochdale US Core Equity & Income Institutional (CNRUX) has an expense ratio of 0.54% and management fee of 0.4%. CNRUX 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 annual returns of 11.84% over the last five years, this is a well-diversified fund with a long track record of success.
ClearBridge Dividend Strategy Y (SOPYX) has an expense ratio of 0.73% and management fee of 0.65%. SOPYX 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. With yearly returns of 10.36% 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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