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3 Mutual Fund Misfires to Avoid - October 28, 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.
AB Allocation Market Real Return Z (AMTZX - Free Report) : 0.84% expense ratio and 0.75% management fee. AMTZX 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. With a five year after-costs return of -2.3%, you're for the most part paying more in charges than returns.
Templeton Foreign R (TEFRX - Free Report) . Expense ratio: 1.31%. Management fee: 0.75%. Over the last 5 years, this fund has generated annual returns of -1.04%.
Hartford Global Real Asset R4 (HRLSX - Free Report) - 1.2% expense ratio, 0.85% management fee. HRLSX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. HRLSX has generated annual returns of -1.82% 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.
Neuberger Berman Real Estate Fund R6 (NRREX - Free Report) : 0.77% expense ratio and 0.85% management fee. NRREX is categorized as a Sector - Real Estate mutual fund, which typically invests in various real estate investment trusts (REIT) due to their taxation rules. With an annual return of 11.04% over the last five years, this fund is a winner.
Principal Large Cap Growth I R4 (PPUSX - Free Report) : Expense ratio: 0.97%. Management fee: 0.6%. PPUSX 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. PPUSX has managed to produce a robust 11.17% over the last five years.
Nuveen Santa Barbara Dividend Growth Fund R6 (NSBFX - Free Report) is an attractive fund with a five-year annualized return of 10.49% and an expense ratio of just 0.65%. NSBFX 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.
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 28, 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.
AB Allocation Market Real Return Z (AMTZX - Free Report) : 0.84% expense ratio and 0.75% management fee. AMTZX 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. With a five year after-costs return of -2.3%, you're for the most part paying more in charges than returns.
Templeton Foreign R (TEFRX - Free Report) . Expense ratio: 1.31%. Management fee: 0.75%. Over the last 5 years, this fund has generated annual returns of -1.04%.
Hartford Global Real Asset R4 (HRLSX - Free Report) - 1.2% expense ratio, 0.85% management fee. HRLSX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. HRLSX has generated annual returns of -1.82% 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.
Neuberger Berman Real Estate Fund R6 (NRREX - Free Report) : 0.77% expense ratio and 0.85% management fee. NRREX is categorized as a Sector - Real Estate mutual fund, which typically invests in various real estate investment trusts (REIT) due to their taxation rules. With an annual return of 11.04% over the last five years, this fund is a winner.
Principal Large Cap Growth I R4 (PPUSX - Free Report) : Expense ratio: 0.97%. Management fee: 0.6%. PPUSX 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. PPUSX has managed to produce a robust 11.17% over the last five years.
Nuveen Santa Barbara Dividend Growth Fund R6 (NSBFX - Free Report) is an attractive fund with a five-year annualized return of 10.49% and an expense ratio of just 0.65%. NSBFX 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.
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