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3 Mutual Fund Misfires to Avoid - October 22, 2019
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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.
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.
JPMorgan Research Market Neutral L : This fund has an expense ratio of 3.26% and a management fee of 0.8%. 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. JPMNX is a Market Neutral - Equity mutual fund. These funds attempt to maximize returns, and usually hold 50% of their securities in a long position and 50% in a short position. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Ivy Cundill Global Value B : 3.19% expense ratio, 1% management fee. ICDBX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. This fund has an annual returns of -2.64% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Wells Fargo International Equity A (WFEAX - Free Report) : This fund has an expense ratio of 1.4% and management fee of 0.85%. WFEAX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. With an annual average return of 1.34% 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
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Neuberger Berman Small Cap Growth Adviser (NBMVX - Free Report) : Expense ratio: 1.45%. Management fee: 1.25%. NBMVX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. This fund has achieved five-year annual returns of an astounding 12.2%.
Davis Real Estate Y (DREYX - Free Report) : Expense ratio: 0.73%. Management fee: 0.55%. Sector - Real Estate funds like DREYX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. DREYX has managed to produce a robust 10.78% over the last five years.
JPMorgan Large Cap Growth I (SEEGX - Free Report) is an attractive fund with a five-year annualized return of 14.14% and an expense ratio of just 0.68%. SEEGX 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.
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).
If you have concerns or any doubts about your investment advisor, read our just-released report:
Image: Bigstock
3 Mutual Fund Misfires to Avoid - October 22, 2019
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.
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.
JPMorgan Research Market Neutral L : This fund has an expense ratio of 3.26% and a management fee of 0.8%. 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. JPMNX is a Market Neutral - Equity mutual fund. These funds attempt to maximize returns, and usually hold 50% of their securities in a long position and 50% in a short position. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Ivy Cundill Global Value B : 3.19% expense ratio, 1% management fee. ICDBX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. This fund has an annual returns of -2.64% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Wells Fargo International Equity A (WFEAX - Free Report) : This fund has an expense ratio of 1.4% and management fee of 0.85%. WFEAX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. With an annual average return of 1.34% 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
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Neuberger Berman Small Cap Growth Adviser (NBMVX - Free Report) : Expense ratio: 1.45%. Management fee: 1.25%. NBMVX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. This fund has achieved five-year annual returns of an astounding 12.2%.
Davis Real Estate Y (DREYX - Free Report) : Expense ratio: 0.73%. Management fee: 0.55%. Sector - Real Estate funds like DREYX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. DREYX has managed to produce a robust 10.78% over the last five years.
JPMorgan Large Cap Growth I (SEEGX - Free Report) is an attractive fund with a five-year annualized return of 14.14% and an expense ratio of just 0.68%. SEEGX 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.
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).
If you have concerns or any doubts about your investment advisor, read our just-released report:
4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future