Are You Invested In These 3 Mutual Fund Misfires? - March 10, 2020

If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your advisor.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each day.

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.

Glenmede Long/Short Fund (GTAPX): 2.43% expense ratio and 1.2% management fee. GTAPX 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 1.87%, you're for the most part paying more in charges than returns.

Frank Value Fund Investor (FRNKX). Expense ratio: 1.49%. Management fee: 1.2%. Over the last 5 years, this fund has generated annual returns of -1.37%.

Catalyst Small Cap Insider Buy A (CTVAX) - 1.77% expense ratio, 1.25% management fee. This fund has yielded yearly returns of -3.68% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.

Hartford Global Growth HLS IB (HBGLX) is a fund that has an expense ratio of 1.06%, and a management fee of 0.75%. HBGLX 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 yearly returns of 12.97% over the last five years, this fund clearly wins.

MFS Mass Investors Growth Stock I (MGTIX) has an expense ratio of 0.48% and management fee of 0.33%. MGTIX 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. Thanks to yearly returns of 14.26% over the last five years, MGTIX is an effectively diversified fund with a long reputation of solidly positive performance.

T. Rowe Price Diversified Mid Cap Growth (PRDMX) has an expense ratio of 0.8% and management fee of 0.64%. PRDMX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. With annual returns of 12.82% over the last five years, this fund is a well-diversified fund with a long track record of success.

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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Zacks Investment Research