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Are You Invested In These 3 Mutual Fund Misfires? - December 12, 2019

Zacks Equity Research

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.

The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.

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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Victory INCORE Low Duration Bond K (RLDKX): 1.27% expense ratio and 0.45% management fee. RLDKX is an Investment Grade Bond - Short option; these funds focus on the short end of the curve, generally with bonds that mature in less than two years. With a five year after-costs return of 1.03%, you're for the most part paying more in charges than returns.

Catalyst/SMH High Income A (HIIFX). Expense ratio: 1.47%. Management fee: 0.45%. Over the last 5 years, this fund has generated annual returns of -0.58%.

Highland Long/Short Equity A (HEOAX): Expense ratio: 2.88%. Management fee: 2.25%. HEOAX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. With annual returns of just 0.69%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

3 Top Ranked Mutual Funds

Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.

Eagle Mid Cap Growth I (HAGIX): Expense ratio: 0.74%. Management fee: 0.52%. HAGIX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. This fund has achieved five-year annual returns of an astounding 11.81%.

Fidelity Growth Strategies Fund K (FAGKX) is a stand out fund. FAGKX is an All Cap Growth mutual fund. In order to increase diversification, these funds have holdings across small, medium, and large-cap levels. With five-year annualized performance of 10.26% and expense ratio of 0.41%, this diversified fund is an attractive buy with a strong history of performance.

MFS Research R3 (MFRHX) has an expense ratio of 0.81% and management fee of 0.43%. MFRHX 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 yearly returns of 10.72% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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.

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Zacks Investment Research