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3 Mutual Fund Misfires to Avoid - December 04, 2019

Zacks Equity Research

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.

Franklin Real Return C (FRRCX): Expense ratio: 1.28%. Management fee: 0.63%. After expenses, the 5 year return is -0.39%, meaning your fees are far higher than the fund's returns.

Hartford Global Real Asset R3 (HRLRX): HRLRX 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. HRLRX offers an expense ratio of 1.5% and annual returns of -2.08% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.

Causeway Global Absolute Return Investor (CGAVX) - 1.55% expense ratio, 1.1% management fee. This fund has yielded yearly returns of -2.61% 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 Mid-Cap Growth Adviser (PAMCX): Expense ratio: 1.01%. Management fee: 0.61%. PAMCX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. This fund has achieved five-year annual returns of an astounding 12.87%.

JPMorgan Large Cap Growth I (SEEGX) has an expense ratio of 0.68% and management fee of 0.45%. 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. With annual returns of 14.14% over the last five years, this is a well-diversified fund with a long track record of success.

Neuberger Berman Real Estate Fund Trust (NBRFX) has an expense ratio of 1.04% and management fee of 1.2%. NBRFX is a Sector - Real Estate fund, and these kinds of mutual funds typically invest in eeal estate investment trusts (REITs) due to their taxation rules. With yearly returns of 10.76% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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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