3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - October 17, 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.

The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.

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.

Fidelity Advisor Strategy Real Return M (FSRTX): 1.1% expense ratio and 0.56% management fee. FSRTX is classified in Investment Grade Bond - Intermediate fund category; these funds target the middle section of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. With a five year after-costs return of 0.48%, you're for the most part paying more in charges than returns.

Commonwealth Global (CNGLX). Expense ratio: 2.53%. Management fee: 0.56%. Over the last 5 years, this fund has generated annual returns of 0.94%.

Shelton - Short/Term US Government Bond K (STUKX): Expense ratio: 0.46%. Management fee: 0.5%. STUKX is a Government Mortgage - Short mutual fund; these funds focus on the mortgage-backed securities (MBS) market and specifially, securities that have less than three years until maturity. With annual returns of just 0.12%, 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.

T. Rowe Price Diversified Mid Cap Growth (PRDMX) is a winner, with an expense ratio of just 0.8% and a five-year annualized return track record of 12.47%.

VY T. Rowe Price Cap Appreciation S (ITCSX) is a stand out fund. ITCSX is categorized as an All Cap Value fund, and like the name suggests, invests across the cap spectrum in small-cap, mid-cap, and large-cap companies. With five-year annualized performance of 10.19% and expense ratio of 0.89%, this diversified fund is an attractive buy with a strong history of performance.

Diamond Hill Large Cap Fund I (DHLRX) has an expense ratio of 0.67% and management fee of 0.5%. DHLRX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. With yearly returns of 10.92% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

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