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.
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.
American Century Short Duration C (ACSKX): 1.59% expense ratio and 0.58% management fee. ACSKX is a Government Bond - Short fund option. These funds hold securities issued by the U.S. federal government in their portfolios, and focus on the short end of the curve, which results in lower yields. With a five year after-expenses return of 0.86%, you're mostly paying more in fees than returns.
Ivy Natural Resources I (IGNIX). Expense ratio: 1.22%. Management fee: 0.58%. Over the last 5 years, this fund has generated annual returns of -3.32%.
Third Avenue Value Fund Investor (TVFVX): This fund has an expense ratio of 1.4% and management fee of 0.9%. TVFVX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. With an annual average return of -1.31% 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.
DreyfusGlobal Stock Y (DGLYX) is a winner, with an expense ratio of just 0.89% and a five-year annualized return track record of 11.03%.
DFA US Large Cap Growth Institutional (DUSLX) has an expense ratio of 0.2% and management fee of 0.17%. DUSLX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Thanks to yearly returns of 12.61% over the last five years, DUSLX is an effectively diversified fund with a long reputation of solidly positive performance.
Emerald Growth Fund Institutional (FGROX): Expense ratio: 0.69%. Management fee: 0.56%. FGROX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. FGROX has produced a 10.36% over the last five years.
Bottom Line
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
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Zacks Investment Research