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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - January 17, 2020

Zacks Equity Research

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.

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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Invesco Global Mkt Neutral Fd Cl Y (MKNYX): 1.24% expense ratio and 0.95% management fee. MKNYX 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. With a five year after-costs return of -3.81%, you're for the most part paying more in charges than returns.

Eagle MLP Strategy C (EGLCX): 2.42% expense ratio, 1.25% management fee. EGLCX is a Sector - Energy fund, which are comprised of various changing and hugely important industries throughout the massive global energy sector. This fund has an annual returns of -9.54% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Catalyst Small Cap Insider Buy A (CTVAX): Expense ratio: 1.77%. Management fee: 1.25%. CTVAX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With annual returns of just -3.68%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Hennessy Focus Fund Institutional (HFCIX) is a fund that has an expense ratio of 1.11%, and a management fee of 0.9%. HFCIX 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 10.09% over the last five years, this fund clearly wins.

JPMorgan Large Cap Growth R2 (JLGZX) has an expense ratio of 1.18% and management fee of 0.45%. JLGZX 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. Thanks to yearly returns of 14.68% over the last five years, JLGZX is an effectively diversified fund with a long reputation of solidly positive performance.

Fidelity Series Allocation Sector Equity (FSAEX): Expense ratio: 0.06%. Management fee: 0%. FSAEX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. FSAEX has produced a 10.84% over the last five years.

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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Zacks Investment Research