3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - November 18, 2019
If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess 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.
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.
Gabelli Focus Five Fund C (GWSCX): This fund has an expense ratio of 2.46% and a management fee of 1%. 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. GWSCX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Invesco Gold & Precious Metals Y (IGDYX): 1.22% expense ratio, 0.75% management fee. Sector - Precious Metal funds like IGDYX normally invest in stocks focused on the mining and production of precious metals such as gold, silver, platinum, and palladium. This fund has an annual returns of 0.51% over the last five years. Another fund guilty of having investors pay more in fees than returns.
SEI Multi-Asset Real Return Fund A (SEIAX): This fund has an expense ratio of 1% and management fee of 0.55%. SEIAX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. With an annual average return of -0.97% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
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.
City Natural Rochdale US Core Equity & Income N (CNRWX): Expense ratio: 1.03%. Management fee: 0.4%. CNRWX 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 11.28%.
BMO Large-Cap Growth Fund A (BALGX): Expense ratio: 0.79%. Management fee: 0.35%. BALGX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. BALGX has managed to produce a robust 11.4% over the last five years.
Victory Sycamore Small Company Opportunity Y (VSOYX) has an expense ratio of 1.09% and management fee of 0.76%. VSOYX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With annual returns of 11.15% over the last five years, this fund is a well-diversified fund with a long track record of success.
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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