• Home
  • News
  • Personal Finance
    • Savings
    • Banking
    • Mortgage
    • Retirement
    • Taxes
    • Wealth
  • Make Money
  • Budgeting
  • Burrow
  • Investing
  • Credit Cards
  • Loans

Subscribe to Updates

Get the latest finance news and updates directly to your inbox.

Top News

The Best Domains Are Gone — Here’s How Savvy Founders Still Snag Them

July 10, 2025

Why Your Old Marketing Tactics Are Killing Your Growth in 2025

July 10, 2025

Mortgage rates tick higher for first time in weeks

July 10, 2025
Facebook Twitter Instagram
Trending
  • The Best Domains Are Gone — Here’s How Savvy Founders Still Snag Them
  • Why Your Old Marketing Tactics Are Killing Your Growth in 2025
  • Mortgage rates tick higher for first time in weeks
  • Social Security & The Big Beautiful Bill
  • Millionaires Are Fleeing These 10 Countries (the First Is Now in Europe)
  • These 5 ‘Free Trials’ Are Draining Your Bank Without Warning
  • Goldman Sachs Asking Junior Bankers to Confirm Loyalty
  • He Went From Customer to CEO of 16 Handles
Thursday, July 10
Facebook Twitter Instagram
FintechoPro
Subscribe For Alerts
  • Home
  • News
  • Personal Finance
    • Savings
    • Banking
    • Mortgage
    • Retirement
    • Taxes
    • Wealth
  • Make Money
  • Budgeting
  • Burrow
  • Investing
  • Credit Cards
  • Loans
FintechoPro
Home » How To Avoid The Worst Sector Mutual Funds 3Q23
Investing

How To Avoid The Worst Sector Mutual Funds 3Q23

News RoomBy News RoomAugust 11, 20230 Views0
Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Email Tumblr Telegram

Question: Why are there so many mutual funds?

Answer: Mutual fund management is profitable, so Wall Street creates more products to sell.

I leverage my firm’s data to identify two red flags you can use to avoid the worst mutual funds:

1. High Fees

Mutual funds should be cheap, but not all of them are. The first step is to benchmark what cheap means.

To ensure you are paying at or below average fees, invest only in mutual funds with total annual costs below 1.84%, – the average total annual costs of the 596 U.S. equity Sector mutual funds my firm covers. The weighted average is lower at 1.08%, which highlights how investors tend to put their money in mutual funds with low fees.

Figure 1 shows Saratoga Financial Services Portfolio (SFPAX) is the most expensive sector mutual fund and Fidelity Real Estate Index Fund (FSRNX) is the least expensive. Saratoga (SFPAX, SBMBX, SHPAX, STPAX, SFPCX) provides five of the most expensive mutual funds while Vanguard (VRTPX, VHCIX, VUIAX) mutual funds are among the cheapest.

Figure 1: 5 Most and Least Expensive Sector Mutual Funds

Investors need not pay high fees for quality holdings. Vanguard Health Care Index Fund (VHCIX) is the best ranked sector mutual fund in Figure 1. VHCIX’s neutral Portfolio Management rating and 0.12% total annual cost earns it an attractive rating. Vanguard Energy Index Fund (VENAX) is the best ranked sector mutual fund overall. VENAX’s attractive Portfolio Management rating and 0.12% total annual cost earns it a very attractive rating.

On the other hand, Fidelity Real Estate Index Fund (FSRNX) holds poor stocks and receives a very unattractive rating, yet has low total annual costs of 0.10%. No matter how cheap a mutual fund, if it holds bad stocks, its performance will be bad. The quality of a mutual fund’s holdings matters more than its price.

2. Poor Holdings

Avoiding poor holdings is by far the hardest part of avoiding bad mutual funds, but it is also the most important because a mutual fund’s performance is determined more by its holdings than its costs. Figure 2 shows the mutual funds within each sector with the worst holdings or portfolio management ratings.

Figure 2: Sector Mutual Funds with the Worst Holdings

Fidelity (FIJZX, FIKCX, FSDAX) appears more often than any other providers in Figure 2, which means that they offer the most mutual funds with the worst holdings.

Firsthand Funds Technology Opportunities (TEFQX) is the worst rated mutual fund in Figure 2 based on predictive overall rating. Manning & Napier Real Estate Series and PGIM Jennison Utility Fund (PRUQX) also earn a very unattractive predictive overall rating, which means not only do they hold poor stocks, they charge high total annual costs.

The Danger Within

Buying a mutual fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on mutual fund holdings is necessary due diligence because a mutual fund’s performance is only as good as its holdings.

PERFORMANCE OF MUTUAL FUND’s HOLDINGs – FEES = PERFORMANCE OF MUTUAL FUND

Disclosure: David Trainer, Kyle Guske II, Hakan Salt, and Italo Mendonça receive no compensation to write about any specific stock, sector, or theme.

Read the full article here

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Articles

He Went From Customer to CEO of 16 Handles

Investing July 9, 2025

Barbara Corcoran Retains Staff With Wild Perks, No Turnover

Investing July 8, 2025

Jack Dorsey Announces Bitchat Messaging App

Investing July 7, 2025

101 Small Business Ideas to Match Your Personality, Investment, Skills & Goals

Investing July 6, 2025

How to Deal With Negative Articles on Google

Investing July 5, 2025

13 Jobs Without College or AI: Salaries Can Start at $70k+

Investing July 2, 2025
Add A Comment

Leave A Reply Cancel Reply

Demo
Top News

Why Your Old Marketing Tactics Are Killing Your Growth in 2025

July 10, 20250 Views

Mortgage rates tick higher for first time in weeks

July 10, 20250 Views

Social Security & The Big Beautiful Bill

July 10, 20250 Views

Millionaires Are Fleeing These 10 Countries (the First Is Now in Europe)

July 10, 20250 Views
Don't Miss

These 5 ‘Free Trials’ Are Draining Your Bank Without Warning

By News RoomJuly 10, 2025

Did you ever sign up for a “free trial” only to wake up to unexplained…

Goldman Sachs Asking Junior Bankers to Confirm Loyalty

July 9, 2025

He Went From Customer to CEO of 16 Handles

July 9, 2025

Nvidia Hits Market Cap Milestone Before Apple, Microsoft

July 9, 2025
Facebook Twitter Instagram Pinterest Dribbble
  • Privacy Policy
  • Terms of use
  • Press Release
  • Advertise
  • Contact
© 2025 FintechoPro. All Rights Reserved.

Type above and press Enter to search. Press Esc to cancel.