Avoid These 3 Mutual Fund Misfires - October 30, 2019

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new 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.

361 Managed Futures Strategy Investor (AMFQX): 2.14% expense ratio and 1.59% management fee. AMFQX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. With a five year after-costs return of 1.28%, you're for the most part paying more in charges than returns.

Templeton Foreign R6 (FTFGX): FTFGX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. FTFGX offers an expense ratio of 0.67% and annual returns of -0.32% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.

American Funds ST Bond Fund of America A (ASBAX) - 0.71% expense ratio, 0.28% management fee. ASBAX 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. ASBAX has generated annual returns of 0.6% over the last five years. Ouch!

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.

Columbia Small Cap Growth Fund I Class R5 (CSCRX) is a fund that has an expense ratio of 0.94%, and a management fee of 0.87%. CSCRX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. With yearly returns of 15.9% over the last five years, this fund clearly wins.

Fidelity Series Growth Company (FCGSX) is a stand out fund. FCGSX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With five-year annualized performance of 14.42% and expense ratio of 0.01%, this diversified fund is an attractive buy with a strong history of performance.

Eaton Vance Atlanta Capital Select Equity A (ESEAX): Expense ratio: 1.05%. Management fee: 0.7%. ESEAX is a part of the Large Cap Value category, and invests in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. ESEAX has produced a 11.76% over the last five years.

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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