Mutual Fund Misfires Of The Market - 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.

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.

SEI Multi-Asset Real Return Fund A (SEIAX): This fund has an expense ratio of 1% and a management fee of 0.55%. 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. SEIAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Snow Capital Small Cap Value C (SNWCX): 2.24% expense ratio, 0.95%. SNWCX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. This fund has yearly returns of -0.6% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Franklin Mutual International A (FMIAX) - 1.22% expense ratio, 0.88% management fee. This fund has yielded yearly returns of 0.88% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.

Victory Sycamore Established Value R6 (VEVRX): 0.58% expense ratio and 0.45% management fee. VEVRX is a Mid Cap Value mutual fund, which targets medium-sized companies with a market cap between $2 billion and $10 billion. With an annual return of 10.51% over the last five years, this fund is a winner.

Principal Blue Chip Fund A (PBLAX) has an expense ratio of 1% and management fee of 0.61%. PBLAX 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 annual returns of 14.4% over the last five years, this is a well-diversified fund with a long track record of success.

Conestoga Smid Cap Investor (CCSMX) is an attractive fund with a five-year annualized return of 14.54% and an expense ratio of just 1.1%. CCSMX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers.

Bottom Line

We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.

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Zacks Investment Research