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.
Goldman Sachs (NYSE:GS) Dynamic Allocation IR (GDHFX): This fund has an expense ratio of 0.91% and a management fee of 0.79%. 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. GDHFX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Ivy Natural Resources N (INRSX). Expense ratio: 1.03%. Management fee: 0.79%. Over the last 5 years, this fund has generated annual returns of -3.15%.
Eaton (NYSE:ETN) Vance Government Obligation A (EVGOX): This fund has an expense ratio of 1.2% and management fee of 0.65%. EVGOX is a Government Mortgage - Short mutual fund; these funds focus on the mortgage-backed securities (MBS) market and specifially, securities that have less than three years until maturity. With an annual average return of 0% 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
There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.
DFA US Large Cap Equity Institutional (DUSQX): 0.18% expense ratio and 0.15% management fee. DUSQX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. With an annual return of 11% over the last five years, this fund is a winner.
Dreyfus US Equity Fund Y (DPUYX) has an expense ratio of 0.8% and management fee of 0.75%. DPUYX 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. Thanks to yearly returns of 11.77% over the last five years, DPUYX is an effectively diversified fund with a long reputation of solidly positive performance.
Neuberger Berman Mid Cap Growth R6 (NRMGX) has an expense ratio of 0.61% and management fee of 0.55%. NRMGX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. With annual returns of 11.12% over the last five years, this fund is a well-diversified fund with a long track record of success.
Bottom Line
Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.
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