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.
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.
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.
JPMorgan International Value Fund C (JIUCX): 1.51% expense ratio and 0.6% management fee. JIUCX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With a five year after-costs return of -1.88%, you're for the most part paying more in charges than returns.
Goldman Sachs Local Emerging Markets Debt A (GAMDX): GAMDX is part of the International Bond - Emerging section. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. GAMDX offers an expense ratio of 1.21% and annual returns of -2.17% 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.
American Funds ST Bond Fund of America R1 (RAMAX): This fund has an expense ratio of 1.47% and management fee of 0.28%. RAMAX is a Government Bond - Short fund option. These funds hold securities issued by the U.S. federal government in their portfolios, and focus on the short end of the curve, which results in lower yields. With an annual average return of 0.31% 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
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.
TIAA-CREF Real Estate Security Institutional (TIREX) is a fund that has an expense ratio of 0.51%, and a management fee of 0.48%. Sector - Real Estate funds like TIREX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. With yearly returns of 11.85% over the last five years, this fund clearly wins.
Wells Fargo Endeavor Select Institutional (WFCIX) has an expense ratio of 0.93% and management fee of 0.7%. WFCIX 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. With annual returns of 14.25% over the last five years, this is a well-diversified fund with a long track record of success.
Columbia Seligman Communications and Information R5 (SCMIX) is an attractive fund with a five-year annualized return of 17.6% and an expense ratio of just 0.95%. SCMIX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach.
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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