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Are You Invested In These 3 Mutual Fund Misfires? - February 04, 2020
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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 plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
American Funds ST Bond Fund of America A (ASBAX - Free Report) : This fund has an expense ratio of 0.7% and a management fee of 0.27%. 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. ASBAX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Davis Government Bond A (RFBAX - Free Report) : 1.05% expense ratio, 0.3% management fee. RFBAX is part of the Government Mortgage - Short fund section. Government Mortgage - Short funds focus on the mortgage-backed security (MBS) market and securities that usually have less than three years until maturity. This fund has an annual returns of -0.16% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Oppenheimer SteelPath MLP Alph Plus C (MLPMX - Free Report) - 3.55% expense ratio, 1.25% management fee. This fund has yielded yearly returns of -10.2% in the course of the last five years. Too bad!
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.
T. Rowe Price New Horizons (PRNHX - Free Report) is a fund that has an expense ratio of 0.76%, and a management fee of 0.64%. PRNHX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With yearly returns of 16.24% over the last five years, this fund clearly wins.
American Funds Washington Mutual Investors R6 (RWMGX - Free Report) : Expense ratio: 0.29%. Management fee: 0.23%. RWMGX is a Large Cap Value fund. These funds invest in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. RWMGX has managed to produce a robust 10.92% over the last five years.
BlackRock Mid Cap Growth Equity Service Class (CMGSX - Free Report) : Expense ratio: 1.05%. Management fee: 0.69%. CMGSX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. CMGSX has produced a 15.47% 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).
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
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Are You Invested In These 3 Mutual Fund Misfires? - February 04, 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.
High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
American Funds ST Bond Fund of America A (ASBAX - Free Report) : This fund has an expense ratio of 0.7% and a management fee of 0.27%. 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. ASBAX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Davis Government Bond A (RFBAX - Free Report) : 1.05% expense ratio, 0.3% management fee. RFBAX is part of the Government Mortgage - Short fund section. Government Mortgage - Short funds focus on the mortgage-backed security (MBS) market and securities that usually have less than three years until maturity. This fund has an annual returns of -0.16% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Oppenheimer SteelPath MLP Alph Plus C (MLPMX - Free Report) - 3.55% expense ratio, 1.25% management fee. This fund has yielded yearly returns of -10.2% in the course of the last five years. Too bad!
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.
T. Rowe Price New Horizons (PRNHX - Free Report) is a fund that has an expense ratio of 0.76%, and a management fee of 0.64%. PRNHX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With yearly returns of 16.24% over the last five years, this fund clearly wins.
American Funds Washington Mutual Investors R6 (RWMGX - Free Report) : Expense ratio: 0.29%. Management fee: 0.23%. RWMGX is a Large Cap Value fund. These funds invest in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. RWMGX has managed to produce a robust 10.92% over the last five years.
BlackRock Mid Cap Growth Equity Service Class (CMGSX - Free Report) : Expense ratio: 1.05%. Management fee: 0.69%. CMGSX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. CMGSX has produced a 15.47% 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).
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.