Mutual Fund Misfires Of The Market - March 10, 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.

High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.

Merk Hard Currency Investor (MERKX): This fund has an expense ratio of 1.26% and a management fee of 1%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. MERKX is an International - Bonds fund, which focuses on fixed income securities from a variety of non-U.S. nations, including major developed economies like Japan, Germany, and the U.K., as well as emerging giants such as India, China, and Brazil. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Gabelli Focus Five Fund A (GWSAX). Expense ratio: 1.64%. Management fee: 1%. Over the last 5 years, this fund has generated annual returns of -1.55%.

Tanaka Growth Fund (TGFRX): Expense ratio: 2.45%. Management fee: 1%. TGFRX 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 just 0.43%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

BlackRock (NYSE:BLK) Advantage Large Cap Core S (MSLRX): Expense ratio: 0.72%. Management fee: 0.43%. MSLRX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. This fund has achieved five-year annual returns of an astounding 10.19%.

MFS Mid-Cap Growth Fund I (OTCIX) has an expense ratio of 0.83% and management fee of 0.69%. OTCIX 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 13.97% over the last five years, this is a well-diversified fund with a long track record of success.

American Funds Growth Fund of America R3 (RGACX) has an expense ratio of 0.97% and management fee of 0.27%. RGACX 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. With yearly returns of 12.02% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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