You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
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.
Hotchkis and Wiley Mid-Cap Value I (HWMIX): 1% expense ratio and 0.75% management fee. HWMIX is a Mid Cap Value mutual fund, which targets medium-sized companies with a market cap between $2 billion and $10 billion. With a five year after-costs return of 0.77%, you're for the most part paying more in charges than returns.
Pacific Advisors Income & Equity A (PADIX): 4.06% expense ratio, 0.75% management fee. PADIX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. This fund has an annual returns of 2.16% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Loomis Sayles Limited Term G&A C (NECLX) - 1.55% expense ratio, 0.37% management fee. NECLX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. NECLX has generated annual returns of 0.44% over the last five years. Ouch!
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.
Franklin DynaTech Adviser (FDYZX): Expense ratio: 0.6%. Management fee: 0.46%. FDYZX is part of the Sector - Tech mutual fund category that invests in technology and lets investors own a stake in a notoriously volatile sector, but with a much more diversified approach. This fund has achieved five-year annual returns of an astounding 16.78%.