3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - October 29, 2019

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.

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.

Oppenheimer SteelPath MLP Alph Plus A (MLPLX): 2.8% expense ratio and 1.25% management fee. MLPLX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. With a five year after-expenses return of -12.4%, you're mostly paying more in fees than returns.

AQR Multi Strategy Alternative N (ASANX). Expense ratio: 2.23%. Management fee: 1.25%. Over the last 5 years, this fund has generated annual returns of -1.39%.

Legg Mason BW Absolute Return Opportunity A (LROAX): Expense ratio: 1.2%. Management fee: 0.64%. LROAX 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 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.

Hartford Stock HLS IA (HSTAX) is a winner, with an expense ratio of just 0.52% and a five-year annualized return track record of 11.79%.

Artisan Global Opportunities Institutional (APHRX) has an expense ratio of 0.91% and management fee of 0.88%. APHRX 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 10.84% over the last five years, APHRX is an effectively diversified fund with a long reputation of solidly positive performance.

Eagle Mid Cap Growth R6 (HRAUX) has an expense ratio of 0.65% and management fee of 0.52%. HRAUX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With yearly returns of 11.92% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

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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