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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - November 25, 2019

Zacks Equity Research

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your advisor.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.

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American Funds Short Term Bond Fund of America R2E (RAAEX): Expense ratio: 1.2%. Management fee: 0.28%. After expenses, the 5 year return is 0.74%, meaning your fees are far higher than the fund's returns.

Oppenheimer SteelPath MLP Alpha I (OSPAX): 1.23% expense ratio, 1.1%. OSPAX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. This fund has yearly returns of -7.16% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Templeton Foreign R6 (FTFGX) - 0.67% expense ratio, 0.69% management fee. FTFGX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. FTFGX has generated annual returns of -0.32% over the last five years. Ouch!

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.

Columbia Global Equity Fund Z (CGEZX): 1.08% expense ratio and 0.87% management fee. CGEZX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With an annual return of 10.51% over the last five years, this fund is a winner.

VY T. Rowe Price Diversified Mid Cap Growth S2 (IAXTX) has an expense ratio of 1.18% and management fee of 0.74%. IAXTX 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. Thanks to yearly returns of 11.94% over the last five years, IAXTX is an effectively diversified fund with a long reputation of solidly positive performance.

Dreyfus/Boston Small/Mid-Cap Growth Y (DBMYX) has an expense ratio of 0.63% and management fee of 0.6%. DBMYX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. With annual returns of 11.71% 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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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.


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Get Your Free (IAXTX): Fund Analysis Report
 
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Zacks Investment Research