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Are You Invested In These 3 Mutual Fund Misfires? - January 27, 2020

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.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.

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AQR Multi Strategy Alternative I (ASAIX): Expense ratio: 1.96%. Management fee: 1.75%. After expenses, the 5 year return is -2.66%, meaning your fees are far higher than the fund's returns.

BTS Tactical Fixed Income C (BTFCX): 2.24% expense ratio, 1%. BTFCX is part of the Investment Grade Bond - Intermediate fund group. These mutual funds focus on the middle part of the curve, generally with bonds that usually mature in more than three years but less than 15 years. This fund has yearly returns of 1.05% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Goldman Sachs N-11 Equity Fund IR (GSYRX) - 1.48% expense ratio, 1.13% management fee. This fund has yielded yearly returns of -2.53% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.

MFS Growth Fund R4 (MFEJX) is a fund that has an expense ratio of 0.66%, and a management fee of 0.55%. MFEJX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With yearly returns of 15.26% over the last five years, this fund clearly wins.

Hartford Core Equity R4 (HGISX) is a stand out fund. HGISX 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 five-year annualized performance of 12.33% and expense ratio of 0.76%, this diversified fund is an attractive buy with a strong history of performance.

BlackRock Mid Cap Growth Equity R (BMRRX) is an attractive fund with a five-year annualized return of 15.11% and an expense ratio of just 1.3%. BMRRX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion.

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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