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Avoid These 3 Mutual Fund Misfires - January 03, 2020

Zacks Equity Research

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.

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BTS Tactical Fixed Income C (BTFCX): Expense ratio: 2.24%. Management fee: 1%. After expenses, the 5 year return is 0.87%, meaning your fees are far higher than the fund's returns.

Brandes International Small Cap Equity C (BINCX): 2.11% expense ratio, 0.95%. BINCX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. This fund has yearly returns of -1.56% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Ivy Cundill Global Value B (ICDBX): This fund has an expense ratio of 3.19% and management fee of 1%. ICDBX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With an annual average return of -2.64% 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

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.

AB Large Cap Growth I (ALLIX): 0.62% expense ratio and 0.51% management fee. ALLIX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With an annual return of 14.7% over the last five years, this fund is a winner.

T. Rowe Price Small Cap Stock Adviser (PASSX) has an expense ratio of 1.14% and management fee of 0.74%. PASSX 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 annual returns of 11.38% over the last five years, this is a well-diversified fund with a long track record of success.

Janus Henderson Enterprise R (JDMRX) has an expense ratio of 1.41% and management fee of 0.64%. JDMRX 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 14.12% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

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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Zacks Investment Research