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.
Janus Henderson Emerging Markets A (HEMAX): 1.37% expense ratio and 1% management fee. HEMAX 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. With a five year after-expenses return of -0.73%, you're mostly paying more in fees than returns.
Hartford Global Real Asset Y (HRLYX). Expense ratio: 0.9%. Management fee: 1%. Over the last 5 years, this fund has generated annual returns of -1.51%.
Intrepid Capital Fund Investor (ICMBX): Expense ratio: 1.4%. Management fee: 1%. ICMBX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. With annual returns of just 0.79%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
PIMCO StockPlus Long Duration Institutional (PSLDX) is a winner, with an expense ratio of just 0.59% and a five-year annualized return track record of 17.08%.
VALIC Company I Large Cap Growth Fund (VLCGX) has an expense ratio of 0.75% and management fee of 0.64%. VLCGX 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 annual returns of 12.68% over the last five years, this is a well-diversified fund with a long track record of success.
Columbia Select Large Cap Equity Fund R5 (CLCRX) has an expense ratio of 0.46% and management fee of 0.76%. CLCRX 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 annual returns of 10.9% over the last five years, this fund is a well-diversified fund with a long track record of success.
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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