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.
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.
Iron Horse Fund I (IRHIX): 1.7% expense ratio and 1.25% management fee. IRHIX 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-expenses return of 1.6%, you're mostly paying more in fees than returns.
Invesco Global Mkt Neutral R6 (MKNSX): 1.24% expense ratio, 0.95% management fee. MKNSX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. This fund has an annual returns of -3.75% over the last five years. Another fund guilty of having investors pay more in fees than returns.
CM Advisors Small Cap Value I (CMOVX) - 1.25% expense ratio, 0.85% management fee. This fund has yielded yearly returns of -1.12% 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.
RMB Dividend Growth I (RMBDX): 0.8% expense ratio and 0.65% management fee. RMBDX 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 an annual return of 11.75% over the last five years, this fund is a winner.
AllianzGI BestStyles US Equit Instl (ABTLX) has an expense ratio of 0.45% and management fee of 0.3%. ABTLX 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. Thanks to yearly returns of 10.45% over the last five years, ABTLX is an effectively diversified fund with a long reputation of solidly positive performance.
Congress Mid Cap Growth Institutional (IMIDX) has an expense ratio of 0.83% and management fee of 0.6%. IMIDX 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 yearly returns of 10.93% 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