Avoid These 3 Mutual Fund Misfires - December 30, 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 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.

The Texas I (BIGTX): Expense ratio: 1.64%. Management fee: 1.45%. After expenses, the 5 year return is -0.11%, meaning your fees are far higher than the fund's returns.

MSIF Active International Allocation L (MSLLX): 1.73% expense ratio, 0.65% management fee. MSLLX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. This fund has an annual returns of 0.97% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Ivy Natural Resources N (INRSX) - 0.93% expense ratio, 0.85% management fee. INRSX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. INRSX has generated annual returns of -7.97% over the last five years. Ouch!

3 Top Ranked Mutual Funds

Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.

AMG Frontier Small Cap Growth I (MSSCX): 0.96% expense ratio and 0.7% management fee. MSSCX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With an annual return of 10.05% over the last five years, this fund is a winner.

Principal Mid Cap R3 (PMBMX) has an expense ratio of 1.16% and management fee of 0.58%. PMBMX 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. Thanks to yearly returns of 12.94% over the last five years, PMBMX is an effectively diversified fund with a long reputation of solidly positive performance.

MFS Mass Investors Growth Stock 529A (EISTX) is an attractive fund with a five-year annualized return of 12.32% and an expense ratio of just 0.76%. EISTX 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.

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.

Do You Know the Top 9 Retirement Investing Mistakes?

Whether you're planning to retire early or not, don't let investing mistakes derail your plans.

If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.

This report will help you steer clear of the most common mistakes, like trying to time the market, lack of diversification in your portfolio, and many more. Get Your FREE Guide Now
 
Get Your Free (EISTX): Fund Analysis Report
 
Get Your Free (INRSX): Fund Analysis Report
 
Get Your Free (MSLLX): Fund Analysis Report
 
Get Your Free (BIGTX): Fund Analysis Report
 
Get Your Free (PMBMX): Fund Analysis Report
 
Get Your Free (MSSCX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research