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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - January 17, 2020

Zacks Equity Research

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 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.

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Leader Total Return A (LCATX): 2.29% expense ratio and 0.75% management fee. LCATX is an Investment Grade Bond - Intermediate fund, which targets bonds that mature in more than three years but less than 15 years, and are a middle of the curve option for investors. With a five year after-costs return of 0.91%, you're for the most part paying more in charges than returns.

Templeton Global Bond R (FGBRX): FGBRX is an International Bond - Developed fund, and these funds funds focus on fixed income securities from developed nations apart from the United States. This usually results in countries like Japan, Germany, the UK, France, and Australia dominating the list of top holdings. FGBRX offers an expense ratio of 1.12% and annual returns of 0.94% 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.

MainStay Cushing Royalty Energy Income I (CURZX) - 1.2% expense ratio, 0.95% management fee. This fund has yielded yearly returns of -14.24% in the course of the last five years. Too bad!

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.

TIAA-CREF Enhanced Large Cap Growth Index Institutional (TLIIX) is a fund that has an expense ratio of 0.33%, and a management fee of 0.3%. TLIIX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With yearly returns of 13.91% over the last five years, this fund clearly wins.

AllianzGI BestStylesU.S.EqtyFdCl R6 (ALSEX) has an expense ratio of 0.4% and management fee of 0.3%. ALSEX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. Thanks to yearly returns of 10.52% over the last five years, ALSEX is an effectively diversified fund with a long reputation of solidly positive performance.

Boston Trust Mid Cap Fund (BTMFX): Expense ratio: 1%. Management fee: 0.75%. BTMFX is a Mid Cap Blend mutual fund, and usually features a portfolio with stocks of various styles and sizes, allowing for diversification within a strategy that focuses on mid cap companies. BTMFX has produced a 10.76% over the last five years.

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).

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
 
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Zacks Investment Research