3 Mutual Fund Misfires To Avoid - March 13, 2020

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.

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.

Invesco Long/Short Equity A (LSQAX): 1.58% expense ratio and 0.8% management fee. LSQAX is a Long Short - Equity fund, and these funds aim to minimize exposure to the broader market, taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. With a five year after-costs return of -0.99%, you're for the most part paying more in charges than returns.

Catalyst MLP & Infrastructure C (MLXCX): 2.43% expense ratio, 1.25% management fee. MLXCX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. This fund has an annual returns of -7.6% over the last five years. Another fund guilty of having investors pay more in fees than returns.

AIG (NYSE:AIG) Commodity Strategy A (SUNAX): This fund has an expense ratio of 1.72% and management fee of 1%. SUNAX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. With an annual average return of -3.36% 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.

Victory Sycamore Established Value I (VEVIX) is a fund that has an expense ratio of 0.6%, and a management fee of 0.45%. VEVIX is a Mid Cap Value mutual fund, which targets medium-sized companies with a market cap between $2 billion and $10 billion. With yearly returns of 10.46% over the last five years, this fund clearly wins.

Columbia Select Large Cap Growth R5 (CGTRX) is a stand out fund. CGTRX 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. With five-year annualized performance of 11.92% and expense ratio of 0.75%, this diversified fund is an attractive buy with a strong history of performance.

Janus Henderson Global Technology I (JATIX) has an expense ratio of 0.76% and management fee of 0.64%. With a much more diversified approach, JATIX--part of the Sector - Tech mutual fund category--gives investors a way to own a stake in the notoriously risky tech sector. With yearly returns of 20.4% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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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Zacks Investment Research