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Are You Invested In These 3 Mutual Fund Misfires? - January 09, 2020

Zacks Equity Research

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your 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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Leader Short-Term Bond Fund C (LCMCX): 2.16% expense ratio and 0.75% management fee. LCMCX is an Investment Grade Bond - Short fund that targets the short end of the curve by focusing on bonds that mature in less than two years. With a five year after-costs return of -0.75%, you're for the most part paying more in charges than returns.

Templeton Institutional Foreign Equity Primary (TFEQX): 0.83% expense ratio, 0.76% management fee. TFEQX 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 0.29% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Ivy Cundill Global Value R (IYCUX) - 1.69% expense ratio, 1% management fee. This fund has yielded yearly returns of -0.98% 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.

BMO Low Volatility Equity I (MLVEX): Expense ratio: 0.65%. Management fee: 0.5%. MLVEX 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. This fund has achieved five-year annual returns of an astounding 10.13%.

Principal Blue Chip Fund A (PBLAX) has an expense ratio of 1% and management fee of 0.66%. PBLAX 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 annual returns of 13.62% over the last five years, this is a well-diversified fund with a long track record of success.

Eagle Mid Cap Growth R6 (HRAUX) is an attractive fund with a five-year annualized return of 11.92% and an expense ratio of just 0.65%. HRAUX 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

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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Zacks Investment Research