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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - October 21, 2019

Zacks Equity Research

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.

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Highland Long/Short Equity C (HEOCX): 3.53% expense ratio and 2.25% management fee. HEOCX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. With a five year after-costs return of 1.12%, you're for the most part paying more in charges than returns.

Aberdeen International Equity R (GIRRX): 1.83% expense ratio, 0.8%. GIRRX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. This fund has yearly returns of -0.22% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Leader Short-Term Bond Fund Investor (LCCMX) - 1.66% expense ratio, 0.75% management fee. LCCMX is an Investment Grade Bond - Short fund that targets the short end of the curve by focusing on bonds that mature in less than two years. LCCMX has generated annual returns of -0.27% over the last five years. Ouch!

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.

MFS Research Fund I (MRFIX): Expense ratio: 0.56%. Management fee: 0.43%. MRFIX 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. This fund has achieved five-year annual returns of an astounding 11%.

PRIMECAP Odyssey Aggressive Growth (POAGX) is a stand out fund. POAGX 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 five-year annualized performance of 11.53% and expense ratio of 0.63%, this diversified fund is an attractive buy with a strong history of performance.

Principal Capital Appreciation I (PWCIX) is an attractive fund with a five-year annualized return of 11.18% and an expense ratio of just 0.47%. PWCIX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset.

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).

If you have concerns or any doubts about your investment advisor, read our just-released report:

4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future


This report can help you avoid the costly mistake of picking or sticking with the wrong investment advisor. Click here for free report>>
 
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Zacks Investment Research