Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.
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 Short Duration A (ADPAX): 0.97% expense ratio and 0.35% management fee. ADPAX 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. With a five year after-expenses return of 0.08%, you're mostly paying more in fees than returns.
Ivy Natural Resources B (IGNBX): 3.78% expense ratio, 0.85% management fee. IGNBX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. This fund has an annual returns of -5.46% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Pacific Advisors Small Cap C (PGSCX): Expense ratio: 6.14%. Management fee: 0.75%. PGSCX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With annual returns of just -2.07%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
State Street (NYSE:STT) Institutional Premier Growth Equity Services (SSPSX) is a fund that has an expense ratio of 0.64%, and a management fee of 0.38%. SSPSX 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. With yearly returns of 12.85% over the last five years, this fund clearly wins.
Jackson Square (NYSE:SQ) SMID-Cap Growth IS (DCGTX) has an expense ratio of 0.87% and management fee of 0.75%. DCGTX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. With annual returns of 13.19% over the last five years, this is a well-diversified fund with a long track record of success.
T. Rowe Price Global Growth Stock Adviser (PAGLX): Expense ratio: 1.1%. Management fee: 0.64%. PAGLX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. PAGLX has produced a 11% 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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Zacks Investment Research