Canada markets open in 5 hours 18 minutes

3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - January 20, 2020

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.

First, let's break down some of the funds currently part of our "Mutual Fund Misfires of the Market." If you happen to have put your money into any of these misfires, we'll help assess some of our best Zacks Ranked mutual funds.

3 Mutual Fund Misfires

Now, let's take a look at three market misfires.

Camelot Excalibur Small Cap Income A (CEXAX): This fund has an expense ratio of 2.62% and a management fee of 1%. 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. CEXAX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

MSIF Multi-Asset Fund L (MMPLX): MMPLX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. MMPLX offers an expense ratio of 1.92% and annual returns of -3.58% 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.

Marketfield R6 (MFRIX): Expense ratio: 2.28%. Management fee: 1.4%. MFRIX 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. With annual returns of just 1.03%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Fidelity Series Growth Company (FCGSX): Expense ratio: 0.01%. Management fee: 0%. FCGSX 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. This fund has achieved five-year annual returns of an astounding 16.18%.

Columbia Seligman Communications and Information R4 (SCIOX) has an expense ratio of 0.99% and management fee of 0.87%. With a much more diversified approach, SCIOX--part of the Sector - Tech mutual fund category--gives investors a way to own a stake in the notoriously risky tech sector. Thanks to yearly returns of 19.39% over the last five years, SCIOX is an effectively diversified fund with a long reputation of solidly positive performance.

ClearBridge Dividend Strategy FI (LBRIX) is an attractive fund with a five-year annualized return of 10.17% and an expense ratio of just 0.99%. LBRIX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

Bottom Line

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.

Do You Know the Top 9 Retirement Investing Mistakes?

Whether you're planning to retire early or not, don't let investing mistakes derail your plans.

If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.


This report will help you steer clear of the most common mistakes, like trying to time the market, lack of diversification in your portfolio, and many more. Get Your FREE Guide Now
 
Get Your Free (FCGSX): Fund Analysis Report
 
Get Your Free (MFRIX): Fund Analysis Report
 
Get Your Free (MMPLX): Fund Analysis Report
 
Get Your Free (CEXAX): Fund Analysis Report
 
Get Your Free (LBRIX): Fund Analysis Report
 
Get Your Free (SCIOX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research