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3 Mutual Fund Misfires to Avoid - January 27, 2020

Zacks Equity Research

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess 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.

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Invesco Macro Allocation Strategy C (GMSEX): Expense ratio: 2.12%. Management fee: 1.1%. After expenses, the 5 year return is 1.69%, meaning your fees are far higher than the fund's returns.

Sirius S&P Strategic Large Cap Allc (SSPLX): 2.61% expense ratio, 1.2%. SSPLX is a Long Short - Equity fund, and these funds aim to minimize exposure to the broader market, taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. This fund has yearly returns of 0.32% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

MFS Inflation Adjusted Bond R1 (MIALX): This fund has an expense ratio of 1.65% and management fee of 0.49%. MIALX 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. With an annual average return of 1.07% over the last five years, 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

Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.

Janus Henderson Enterprise A (JDMAX) is a winner, with an expense ratio of just 1.11% and a five-year annualized return track record of 12.8%.

WCM Focused International Growth Fund Investor (WCMRX) has an expense ratio of 1.24% and management fee of 0.85%. WCMRX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. With annual returns of 11.59% over the last five years, this is a well-diversified fund with a long track record of success.

DFA Enhanced US Large Company I (DFELX): Expense ratio: 0.15%. Management fee: 0.2%. DFELX 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. DFELX has produced a 11.63% over the last five years.

Bottom Line

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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Get Your Free (DFELX): Fund Analysis Report
 
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