Mutual Fund Misfires Of The Market - March 25, 2020

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess 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.

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.

Saratoga Investment Quality Bond I (SIBPX): 1.27% expense ratio and 0.55% management fee. SIBPX is a Government Bond - Long fund choice, holding securities issued by the U.S. federal government. This fund category focuses on the long end of the curve, which can result in higher yields but greater sensitivity to interest rate fluctuations. With a five year after-costs return of 0.83%, you're for the most part paying more in charges than returns.

Arrow DWA Balanced Fund A (DWAFX). Expense ratio: 1.72%. Management fee: 0.55%. Over the last 5 years, this fund has generated annual returns of 0.79%.

MFS Inflation Adjusted Bond R1 (MIALX): Expense ratio: 1.65%. Management fee: 0.49%. MIALX is classified as a Government - Bonds fund. These funds hold securities issued by the U.S. federal government in their portfolios, and focus across the curve, meaning the yields and interest rate sensitivity will vary. With annual returns of just 1.07%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

American Funds Washington Mutual Investors R6 (RWMGX) is a winner, with an expense ratio of just 0.28% and a five-year annualized return track record of 10.92%.

MassMutual Premier Disciplined Growth Admiral (MPGLX) has an expense ratio of 0.85% and management fee of 0.45%. MPGLX 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. Thanks to yearly returns of 12.62% over the last five years, MPGLX is an effectively diversified fund with a long reputation of solidly positive performance.

Baron Partners Fund Institutional (BPTIX): Expense ratio: 1.07%. Management fee: 1%. BPTIX 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. BPTIX has produced a 13.9% over the last five years.

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