3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - December 03, 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 coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.
First, let's break down some of the funds currently part of our "Mutual Fund Misfires of the Market." If you happen to have put your money into any of these misfires, we'll help assess some of our best Zacks Ranked mutual funds.
3 Mutual Fund Misfires
Now, let's take a look at three market misfires.
Iron Strategic Income Fund Investor (IRNIX): This fund has an expense ratio of 1.45% and a management fee of 0.65%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. IRNIX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Gabelli Focus Five Fund I (GWSIX). Expense ratio: 1.46%. Management fee: 0.65%. Over the last 5 years, this fund has generated annual returns of -0.95%.
Glenmede Long/Short Fund (GTAPX): Expense ratio: 2.46%. Management fee: 1.2%. GTAPX 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 annual returns of just 2.32%, 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.
Fidelity Growth Strategies Fund (FDEGX): Expense ratio: 0.54%. Management fee: 0.38%. FDEGX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. This fund has achieved five-year annual returns of an astounding 10.1%.
Eagle Mid Cap Growth R5 (HARSX): Expense ratio: 0.74%. Management fee: 0.52%. HARSX 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. HARSX has managed to produce a robust 11.78% over the last five years.
JPMorgan Small Cap Growth Fund A (PGSGX) has an expense ratio of 1.24% and management fee of 0.65%. PGSGX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. With annual returns of 12.36% over the last five years, this fund is a well-diversified fund with a long track record of success.
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
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