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Are You Invested In These 3 Mutual Fund Misfires? - April 03, 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.

High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.

James Alpha Multi-StrtgyAltIncFd I (JAIMX): This fund has an expense ratio of 3.14% and a management fee of 2%. 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. JAIMX is a Long Short - Equity fund, and these funds aim to minimize exposure to the broader market, taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

MainStay Cushing Royalty Energy Income I (CURZX): 1.2% expense ratio, 0.95% management fee. CURZX 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. This fund has an annual returns of -14.24% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Transamerica Small Cap Core C (SCCCX): Expense ratio: 2.01%. Management fee: 0.83%. SCCCX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. With annual returns of just 1.54%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Conestoga Smid Cap Institutional (CCSGX): 0.85% expense ratio and 0.85% management fee. CCSGX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With an annual return of 14.8% over the last five years, this fund is a winner.

Columbia Select Large Cap Growth R5 (CGTRX) has an expense ratio of 0.75% and management fee of 0.66%. CGTRX 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. Thanks to yearly returns of 11.92% over the last five years, CGTRX is an effectively diversified fund with a long reputation of solidly positive performance.

Davenport Small Cap Focus Fund (DSCPX) has an expense ratio of 0.96% and management fee of 0.75%. DSCPX is a Small Cap Blend mutual fund, allowing investors a way to diversify their funds among various types of small-cap stocks. With annual returns of 10.67% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

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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