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3 Mutual Fund Misfires to Avoid - February 14, 2020

Zacks Equity Research

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.

The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.

Below, you'll read about some of the funds included in our current list of "Mutual Fund Misfires of the Market." And if by chance you're invested in any of these misfires, we'll help and review some of our highest Zacks Ranked mutual funds.

3 Mutual Fund Misfires

Now, let's take a look at three market misfires.

Oppenheimer SteelPath MLP Alph Plus A (MLPLX): 2.8% expense ratio and 1.25% management fee. MLPLX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. With a five year after-expenses return of -10.53%, you're mostly paying more in fees than returns.

Great-West Templeton Global Bond (MXGBX): 1.01% expense ratio, 0.58% management fee. MXGBX is classified as a Diversified Bonds fund, which offers exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. This fund has an annual returns of 0.86% over the last five years. Another fund guilty of having investors pay more in fees than returns.

America First Defensive Growth I (DGQIX) - 2.8% expense ratio, 1.5% management fee. This fund has yielded yearly returns of -2.72% in the course of the last five years. Too bad!

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.

MFS Global New Discovery I (GLNIX) is a fund that has an expense ratio of 1.26%, and a management fee of 0.98%. GLNIX 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. With yearly returns of 11.21% over the last five years, this fund clearly wins.

Fidelity Strategic Advisers Growth Fund (FSGFX) has an expense ratio of 0.13% and management fee of 0.36%. FSGFX 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 12.66% over the last five years, this is a well-diversified fund with a long track record of success.

Columbia Acorn European Fund R5 (CAEEX): Expense ratio: 1.13%. Management fee: 1.16%. CAEEX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. CAEEX has produced a 10.79% over the last five years.

Bottom Line

So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.

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