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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - January 23, 2020

Zacks Equity Research

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.

High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.

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.

Merk Hard Currency Investor (MERKX): 1.27% expense ratio and 1% management fee. MERKX is an International - Bonds fund, which focuses on fixed income securities from a variety of non-U.S. nations, including major developed economies like Japan, Germany, and the U.K., as well as emerging giants such as India, China, and Brazil. With a five year after-costs return of -2.37%, you're for the most part paying more in charges than returns.

American Century Equity & Income Market Neutral Investor (ALHIX): ALHIX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. ALHIX offers an expense ratio of 1.38% and annual returns of -1.22% 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.

Leader Short-Term Bond Fund Investor (LCCMX): Expense ratio: 1.66%. Management fee: 0.75%. LCCMX is an Investment Grade Bond - Short option; these funds focus on the short end of the curve, generally with bonds that mature in less than two years. With annual returns of just 0.07%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

DFA US Large Company I (DFUSX): Expense ratio: 0.08%. Management fee: 0.06%. DFUSX 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. This fund has achieved five-year annual returns of an astounding 11.65%.

Hartford Global Growth HLS IB (HBGLX) has an expense ratio of 1.06% and management fee of 0.75%. HBGLX 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. Thanks to yearly returns of 12.97% over the last five years, HBGLX is an effectively diversified fund with a long reputation of solidly positive performance.

State Street Institutional Premier Growth Equity Services (SSPSX) has an expense ratio of 0.63% and management fee of 0.37%. SSPSX 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. With yearly returns of 12.85% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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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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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