Are You Invested In These 3 Mutual Fund Misfires? - March 24, 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.

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.

Federated Fund for US Government Security B (FUSBX): 1.72% expense ratio and 0.41% management fee. FUSBX is part of the Government Mortgage - Intermediate fund section. Government Mortgage - Intermediate funds focus on the mortgage-backed security (MBS) market and securities that usually have at least three years to maturity but less than 10. With a five year after-costs return of 0.71%, you're for the most part paying more in charges than returns.

BlackRock (NYSE:BLK) Eurofund A (MDEFX): MDEFX is one of many Europe - Equity mutual funds, which are known for investing their assets in stocks based in countries like Great Britain, Germany, France, Italy, and Spain. MDEFX offers an expense ratio of 1.39% and annual returns of 1.32% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.

ProFunds UltraSector Oil & Gas Investor (ENPIX) - 1.74% expense ratio, 0.75% management fee. This fund has yielded yearly returns of -8.58% 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.

Columbia Acorn European Fund R5 (CAEEX): Expense ratio: 1.13%. Management fee: 1.16%. CAEEX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has achieved five-year annual returns of an astounding 10.79%.

Great-West Multi Manager Large Cap Growth (MXLGX) has an expense ratio of 1% and management fee of 0.64%. MXLGX 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. Thanks to yearly returns of 13.76% over the last five years, MXLGX is an effectively diversified fund with a long reputation of solidly positive performance.

MSIF Global Opportunity Portfolio A (MGGPX) has an expense ratio of 1.23% and management fee of 0.74%. MGGPX 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 annual returns of 16.39% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.

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Zacks Investment Research