Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - January 06, 2020

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.

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.

Pzena Emerging Markets Value Inv (PZVEX): This fund has an expense ratio of 1.58% 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. PZVEX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

American Funds Short Term Bond Fund of America R2E (RAAEX). Expense ratio: 1.18%. Management fee: 1%. Over the last 5 years, this fund has generated annual returns of 0.74%.

Goodwood SMID Cap Long/Short Institutional (GAMIX) - 1.35% expense ratio, 0.84% management fee. This fund has yielded yearly returns of -4.61% in the course of the last five years. Too bad!

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.

Direxion Monthly S&P 500 Bull 2X Investor (DXSLX) is a winner, with an expense ratio of just 1.35% and a five-year annualized return track record of 16.83%.

AQR Large Cap Momentum Style R6 (QMORX) has an expense ratio of 0.3% and management fee of 0.25%. QMORX 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. Thanks to yearly returns of 10.33% over the last five years, QMORX is an effectively diversified fund with a long reputation of solidly positive performance.

VY T. Rowe Price Diversified Mid Cap Growth Investor (IAXIX) is an attractive fund with a five-year annualized return of 12.38% and an expense ratio of just 0.78%. IAXIX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers.

Bottom Line

We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.

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