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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - December 06, 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.

High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.

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.

Marketfield C (MFCDX): Expense ratio: 3.4%. Management fee: 1.4%. After expenses, the 5 year return is -2%, meaning your fees are far higher than the fund's returns.

Brandes International Small Cap Equity C (BINCX): BINCX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. BINCX offers an expense ratio of 2.11% and annual returns of -1.56% 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.

Ivy Natural Resources E (IGNEX) - 1.27% expense ratio, 0.85% management fee. IGNEX 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. IGNEX has generated annual returns of -8.66% over the last five years. Ouch!

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.

Hartford Core Equity R5 (HGITX) is a winner, with an expense ratio of just 0.49% and a five-year annualized return track record of 12.27%.

MainStay Large Cap Growth R3 (MLGRX) is a stand out fund. MLGRX 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 five-year annualized performance of 12.26% and expense ratio of 1.34%, this diversified fund is an attractive buy with a strong history of performance.

AMG Frontier Small Cap Growth Z (MSSYX) has an expense ratio of 0.9% and management fee of 0.7%. MSSYX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With annual returns of 10.21% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).

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