Are You Invested In These 3 Mutual Fund Misfires? - November 13, 2019

You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.

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.

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.

PIMCO Unconstrained Bond C (PUBCX): Expense ratio: 1.95%. Management fee: 0.95%. After expenses, the 5 year return is 1.62%, meaning your fees are far higher than the fund's returns.

Templeton Emerging Markets Small Cap Adviser (TEMZX). Expense ratio: 1.67%. Management fee: 0.95%. Over the last 5 years, this fund has generated annual returns of 1.06%.

AB Allocation Market Real Return A (AMTAX) - 1.26% expense ratio, 0.75% management fee. AMTAX 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. AMTAX has generated annual returns of -3.49% over the last five years. Ouch!

3 Top Ranked Mutual Funds

Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.

Columbia Small Cap Growth Fund I Class Y (CSGYX) is a fund that has an expense ratio of 0.93%, and a management fee of 0.87%. CSGYX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. With yearly returns of 15.96% over the last five years, this fund clearly wins.

SEI Institutional Investor Trust US Managed Volaty A (SVYAX) has an expense ratio of 0.2% and management fee of 0.65%. SVYAX is a Large Cap Value mutual fund, which invests in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. Thanks to yearly returns of 10.5% over the last five years, SVYAX is an effectively diversified fund with a long reputation of solidly positive performance.

William Blair Large Cap Growth N (LCGNX) has an expense ratio of 1% and management fee of 0.6%. LCGNX 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 yearly returns of 14.83% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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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