3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - October 25, 2019

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.

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.

IMS Strategic Income Fund (IMSIX): This fund has an expense ratio of 1.98% and a management fee of 1.26%. 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. IMSIX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

American Century Short Duration Inflation Protected C (APOCX): 1.57% expense ratio, 0.56% management fee. APOCX is classified as a Government - Bonds fund. These funds hold securities issued by the U.S. federal government in their portfolios, and focus across the curve, meaning the yields and interest rate sensitivity will vary. This fund has an annual returns of 0.08% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Saratoga International Equity I (SIEPX) - 1.25% expense ratio, 0.75% management fee. This fund has yielded yearly returns of -2.89% 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.

Cohen & Steers Realty Shares Institutional (CSRIX): Expense ratio: 0.75%. Management fee: 0.75%. CSRIX is categorized as a Sector - Real Estate mutual fund, which typically invests in various real estate investment trusts (REIT) due to their taxation rules. This fund has achieved five-year annual returns of an astounding 11.61%.

MFS Growth Fund R2 (MEGRX) has an expense ratio of 1.16% and management fee of 0.55%. MEGRX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. With annual returns of 13.93% over the last five years, this is a well-diversified fund with a long track record of success.

Baird Midcap Investor (BMDSX) has an expense ratio of 1.06% and management fee of 0.75%. BMDSX 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. With yearly returns of 10.79% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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.

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