Avoid These 3 Mutual Fund Misfires - March 11, 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.

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.

Goodwood SMID Cap Long/Short Institutional (GAMIX): Expense ratio: 1.35%. Management fee: 0.84%. After expenses, the 5 year return is -2.04%, meaning your fees are far higher than the fund's returns.

AQR Equity Market Neutral R6 (QMNRX): 1.2% expense ratio, 1.1% management fee. QMNRX 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 0.69% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Guinness Atkinson Renminbi Yuan & Bond (GARBX): This fund has an expense ratio of 0.91% and management fee of 0.55%. GARBX is an International Bond - Emerging mutual fund, which focus on fixed income securities from emerging nations around the globe. With an annual average return of 0.6% 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

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.

Dreyfus Appreciation Fund Y (DGYGX) is a winner, with an expense ratio of just 0.59% and a five-year annualized return track record of 11.22%.

MSIF Global Quality Portfolio IS (MGQSX): Expense ratio: 0.84%. Management fee: 0.7%. MGQSX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. MGQSX has managed to produce a robust 12.04% over the last five years.

Franklin DynaTech R6 (FDTRX) has an expense ratio of 0.5% and management fee of 0.46%. FDTRX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. With yearly returns of 16.95% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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