Mutual Fund Misfires Of The Market - March 26, 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 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.

AB Short Duration C (ADPCX): 1.18% expense ratio and 0.35% management fee. ADPCX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. With a five year after-costs return of 0.7%, you're for the most part paying more in charges than returns.

Ivy Natural Resources Y (IGNYX): 1.44% expense ratio, 0.85% management fee. IGNYX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. This fund has an annual returns of -3.53% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Voya GNMA Income C (LEGNX): Expense ratio: 1.7%. Management fee: 0.56%. LEGNX is a Government Mortgage - Intermediate fund, focusing on the mortgage-backed securities (MBS) market and securities with at least three years to maturity but less than 10. With annual returns of just 1.3%, 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.

Commerce Mid Cap Growth (CFAGX): 0.81% expense ratio and 0.5% management fee. CFAGX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With an annual return of 12.35% over the last five years, this fund is a winner.

Fidelity Advisor Health Care I (FHCIX) has an expense ratio of 0.76% and management fee of 0.54%. FHCIX is a Sector - Health mutual fund, which give investors an opportunity to focus on healthcare, one of the largest sectors of the American economy. With annual returns of 10.4% over the last five years, this is a well-diversified fund with a long track record of success.

American Funds Growth Fund of America F (GFAFX) has an expense ratio of 0.69% and management fee of 0.27%. GFAFX 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 12.32% over the last five years, this fund is a well-diversified fund with a long track record of success.

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