3 Mutual Fund Misfires To Avoid - March 03, 2020

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new 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.

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.

Bread & Butter Fund (BABFX): 2% expense ratio and 1% management fee. BABFX, an All Cap Value option, is a type of mutual fund that buys stakes in companies in all three valuation categories. With a five year after-expenses return of 0.43%, you're mostly paying more in fees than returns.

American Funds ST Bond Fund of America 529A (CAAFX). Expense ratio: 0.73%. Management fee: 1%. Over the last 5 years, this fund has generated annual returns of 0.64%.

Great-West Templeton Global Bond (MXGBX) - 1.01% expense ratio, 0.58% management fee. MXGBX is a Diversified Bonds investment option; these funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. MXGBX has generated annual returns of 0.86% 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.

Principal Large Cap Growth I A (PLGAX): Expense ratio: 1%. Management fee: 0.6%. PLGAX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. This fund has achieved five-year annual returns of an astounding 10.91%.

MFS Global New Discovery I (GLNIX) is a stand out fund. GLNIX 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 five-year annualized performance of 11.21% and expense ratio of 1.26%, this diversified fund is an attractive buy with a strong history of performance.

KP Large Cap Equity Institutional (KPLCX): Expense ratio: 0.3%. Management fee: 0.24%. KPLCX 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. KPLCX has produced a 11.41% over the last five years.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

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