Avoid These 3 Mutual Fund Misfires - December 10, 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 coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.
Virtus Equity Trend C (VAPCX): This fund has an expense ratio of 2.3% and a management fee of 1%. 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. VAPCX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Snow Capital Small Cap Value Institutional (SNWIX): 1.25% expense ratio, 0.95% management fee. SNWIX is a Small Cap Value mutual fund, investing in small companies with stock market valuation less than $2 billion. This fund has an annual returns of -0.84% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Templeton Frontier Markets Adviser (FFRZX): This fund has an expense ratio of 1.71% and management fee of 1.4%. FFRZX 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. With an annual average return of -7.5% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
3 Top Ranked Mutual Funds
Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.
MSIF Global Quality Portfolio IS (MGQSX): Expense ratio: 0.84%. Management fee: 0.7%. MGQSX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. This fund has achieved five-year annual returns of an astounding 10.22%.
Fidelity Blue Chip Growth (FBGRX) has an expense ratio of 0.8% and management fee of 0.64%. FBGRX 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. Thanks to yearly returns of 12.9% over the last five years, FBGRX is an effectively diversified fund with a long reputation of solidly positive performance.
T. Rowe Price Small Cap Stock Fund (OTCFX): Expense ratio: 0.88%. Management fee: 0.74%. OTCFX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. OTCFX has produced a 11.69% over the last five years.
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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