3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - November 08, 2019
Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new 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.
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.
AQR Multi Strategy Alternative R6 (QSARX): 1.87% expense ratio and 1.75% management fee. QSARX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. With a five year after-costs return of -1.04%, you're for the most part paying more in charges than returns.
MSIF Active International Allocation A (MSIBX): MSIBX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. MSIBX offers an expense ratio of 1.23% and annual returns of 0.46% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.
Ivy Natural Resources N (INRSX) - 0.93% expense ratio, 0.85% management fee. This fund has yielded yearly returns of -7.97% in the course of the last five years. Too bad!
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.
Principal Blue Chip Fund A (PBLAX) is a fund that has an expense ratio of 0.99%, and a management fee of 0.66%. PBLAX 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 yearly returns of 13.62% over the last five years, this fund clearly wins.
Columbia Seligman Communications and Information R (SCIRX) has an expense ratio of 1.49% and management fee of 0.87%. SCIRX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. With annual returns of 16.92% over the last five years, this is a well-diversified fund with a long track record of success.
T. Rowe Price Institutional Mid-Cap Equity Growth (PMEGX) has an expense ratio of 0.61% and management fee of 0.6%. PMEGX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With annual returns of 13.83% over the last five years, this fund is a well-diversified fund with a long track record of success.
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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