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.
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.
Hotchkis and Wiley Mid-Cap Value C (HWMCX): 2% expense ratio and 0.75% management fee. HWMCX is a Mid Cap Value fund, which usually invests in companies with a stock market valuation between $2 billion and $10 billion. With a five year after-costs return of -0.23%, you’re for the most part paying more in charges than returns.
American Funds ST Bond Fund of America 529C (CCAMX): CCAMX is a Government Bond – Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. CCAMX offers an expense ratio of 1.46% and annual returns of -0.1% 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.
Merk Hard Currency Investor (MERKX) – 1.26% expense ratio, 1% management fee. MERKX is included in the International – Bonds category. From major developed economies like Japan, Germany, and the UK to emerging giants such as India, China, and Brazil, International – Bonds funds invest in fixed income securities from a variety of nations, excluding the United States. MERKX has generated annual returns of -2.37% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that we’ve covered our “worst offender” list, let’s take a look at some of Zacks’ highest ranked mutual funds with some of the lowest fees you may want to consider.
Principal Capital Appreciation R3 (PCAOX) is a fund that has an expense ratio of 1.06%, and a management fee of 0.47%. PCAOX 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. With yearly returns of 11.1% over the last five years, this fund clearly wins.
American Funds Washington Mutual Investors R6 (RWMGX) has an expense ratio of 0.28% and management fee of 0.23%. RWMGX is a Large Cap Value mutual fund, which invests in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. Thanks to yearly returns of 10.92% over the last five years, RWMGX is an effectively diversified fund with a long reputation of solidly positive performance.
Boston Trust Small Cap Fund (BOSOX) is an attractive fund with a five-year annualized return of 10.23% and an expense ratio of just 1%. BOSOX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets.
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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