3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - November 15, 2019
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.
High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
Causeway Global Absolute Return Investor (CGAVX): 1.55% expense ratio and 1.1% management fee. CGAVX is a Market Neutral - Equity mutual fund. These funds attempt to maximize returns, and usually hold 50% of their securities in a long position and 50% in a short position. With a five year after-expenses return of -2.61%, you're mostly paying more in fees than returns.
ClearBridge Intl Small Cap A2 (LCRNX): 1.63% expense ratio, 0.8%. LCRNX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has yearly returns of -0.97% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Hartford Global Real Asset C (HRLCX): Expense ratio: 2%. Management fee: 0.85%. HRLCX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With annual returns of just -2.58%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
3 Top Ranked Mutual Funds
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Janus Henderson Global Technology T (JAGTX): Expense ratio: 0.93%. Management fee: 0.64%. JAGTX is part of the Sector - Tech mutual fund category that invests in technology and lets investors own a stake in a notoriously volatile sector, but with a much more diversified approach. This fund has achieved five-year annual returns of an astounding 18.71%.
Conestoga Small Cap Institutional (CCALX) is a stand out fund. CCALX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. With five-year annualized performance of 15.54% and expense ratio of 0.9%, this diversified fund is an attractive buy with a strong history of performance.
Columbia Select Large Cap Equity Fund R5 (CLCRX) has an expense ratio of 0.46% and management fee of 0.76%. CLCRX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of 10.9% 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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