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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - December 23, 2019

Zacks Equity Research

If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your advisor.

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.

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Guinness Atkinson Renminbi Yuan & Bond (GARBX): 0.91% expense ratio and 0.55% management fee. GARBX is an International Bond - Emerging mutual fund, which focus on fixed income securities from emerging nations around the globe. With a five year after-costs return of -0.22%, you're for the most part paying more in charges than returns.

Invesco International Small Company C (IEGCX). Expense ratio: 2.33%. Management fee: 0.55%. Over the last 5 years, this fund has generated annual returns of 0.77%.

SEI Multi-Asset Real Return Fund A (SEIAX): This fund has an expense ratio of 1% and management fee of 0.55%. SEIAX 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. With an annual average return of -0.97% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.

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.

Eagle Mid Cap Growth R6 (HRAUX): 0.65% expense ratio and 0.52% management fee. HRAUX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. With an annual return of 11.92% over the last five years, this fund is a winner.

JPMorgan Large Cap Growth I (SEEGX) is a stand out fund. SEEGX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With five-year annualized performance of 14.14% and expense ratio of 0.68%, this diversified fund is an attractive buy with a strong history of performance.

Virtus KAR Small-Cap Core I (PKSFX): Expense ratio: 1.02%. Management fee: 0.75%. PKSFX is a Small Cap Blend mutual fund that usually targets companies with a market capitalization of less than $2 billion. PKSFX has produced a 17.9% over the last five years.

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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Zacks Investment Research