Avoid These 3 Mutual Fund Misfires - March 20, 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.
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.
Oppenheimer SteelPath MLP Alph Plus C (MLPMX): This fund has an expense ratio of 3.55% and a management fee of 1.25%. 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. MLPMX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Pacific Advisors Mid Cap Value C (PMVCX). Expense ratio: 7.4%. Management fee: 1.25%. Over the last 5 years, this fund has generated annual returns of -3.6%.
Timothy Plan Defensive Strategy C (TPDCX): This fund has an expense ratio of 2.16% and management fee of 0.6%. TPDCX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. With an annual average return of 1.24% 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
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.
Fidelity Japan Smaller Companies (FJSCX) is a fund that has an expense ratio of 0.93%, and a management fee of 0.69%. FJSCX is a Japan - Equity fund option, and these funds primarily invest in companies in one of the world's richest and most diversified economies, Japan. With yearly returns of 11.54% over the last five years, this fund clearly wins.
T. Rowe Price Blue Chip Growth Fund (TRBCX) has an expense ratio of 0.69% and management fee of 0.56%. TRBCX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. Thanks to yearly returns of 13.95% over the last five years, TRBCX is an effectively diversified fund with a long reputation of solidly positive performance.
Selected American Shares D (SLADX): Expense ratio: 0.66%. Management fee: 0.55%. SLADX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. SLADX has produced a 10.23% 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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