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3 Mutual Fund Misfires to Avoid - November 01, 2019

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 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.

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.

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Goldman Sachs Local Emerging Markets Debt C (GCMDX): This fund has an expense ratio of 1.96% and a management fee of 0.8%. 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. GCMDX is part of the International Bond - Emerging section. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

American Century International Value Investor (ACEVX): 1.36% expense ratio, 1.28% management fee. ACEVX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has an annual returns of -1.02% over the last five years. Another fund guilty of having investors pay more in fees than returns.

American Funds ST Bond Fund of America R3 (RAMCX): This fund has an expense ratio of 1% and management fee of 0.28%. RAMCX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. With an annual average return of 0.76% 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

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.

Principal Capital Appreciation R1 (PCAMX): 1.37% expense ratio and 0.47% management fee. PCAMX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With an annual return of 10.21% over the last five years, this fund is a winner.

Glenmede Large Cap Growth Fund (GTLLX) is a stand out fund. GTLLX 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 five-year annualized performance of 12.36% and expense ratio of 0.87%, this diversified fund is an attractive buy with a strong history of performance.

Vanguard Explorer Fund Admiral (VEXRX): Expense ratio: 0.34%. Management fee: 0.31%. VEXRX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. VEXRX has produced a 10.6% over the last five years.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

If you have concerns or any doubts about your investment advisor, read our just-released report:

4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future


This report can help you avoid the costly mistake of picking or sticking with the wrong investment advisor. Click here for free report>>
 
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Zacks Investment Research