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Are You Invested In These 3 Mutual Fund Misfires? - December 04, 2019

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.

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.

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.

Hartford Global Real Asset I (HRLIX): Expense ratio: 0.97%. Management fee: 0.85%. After expenses, the 5 year return is -1.58%, meaning your fees are far higher than the fund's returns.

Oppenheimer SteelPath MLP Alpha A (MLPAX): MLPAX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. MLPAX offers an expense ratio of 1.54% and annual returns of -8.38% 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.

AMG SouthernSun Small Cap I (SSSIX): This fund has an expense ratio of 1% and management fee of 0.75%. SSSIX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With an annual average return of 0.74% 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.

Janus Henderson Global Technology T (JAGTX): 0.93% expense ratio and 0.64% management fee. JAGTX is part of the Sector - Tech mutual fund category that invests in technology and lets investors own a stake in a notoriously volatile sector, but with a much more diversified approach. With an annual return of 18.71% over the last five years, this fund is a winner.

Voya Large Cap Growth W (IGOWX) has an expense ratio of 0.7% and management fee of 0.51%. IGOWX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. Thanks to yearly returns of 12.4% over the last five years, IGOWX is an effectively diversified fund with a long reputation of solidly positive performance.

T. Rowe Price Institutional Mid-Cap Equity Growth (PMEGX) has an expense ratio of 0.61% and management fee of 0.6%. PMEGX 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 13.83% 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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