Mutual Fund Misfires of the Market - January 29, 2020

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.

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.

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.

AB International Value C (ABICX): This fund has an expense ratio of 2.32% and a management fee of 0.75%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. ABICX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

PIMCO Allocation Asset Allocation Authority C (PAUCX): 2.71% expense ratio, 0.45% management fee. PAUCX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. This fund has an annual returns of 1.37% over the last five years. Another fund guilty of having investors pay more in fees than returns.

BlackRock Eurofund C (MCEFX) - 2.14% expense ratio, 0.75% management fee. MCEFX is a Europe - Equity mutual fund investing in stocks across the vast European continent. MCEFX has generated annual returns of 1.56% 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.

BMO Large-Cap Growth Fund A (BALGX) is a winner, with an expense ratio of just 0.79% and a five-year annualized return track record of 12.03%.

T. Rowe Price Diversified Mid Cap Growth (PRDMX): Expense ratio: 0.8%. Management fee: 0.64%. PRDMX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. PRDMX has managed to produce a robust 12.82% over the last five years.

PIMCO StocksPlus P (PSKPX): Expense ratio: 0.6%. Management fee: 0.6%. PSKPX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. PSKPX has produced a 11.44% over the last five years.

Bottom Line

These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).

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