Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - January 03, 2020

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.

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.

Ivy Cundill Global Value C (ICDCX): Expense ratio: 2.13%. Management fee: 1%. After expenses, the 5 year return is -1.45%, meaning your fees are far higher than the fund's returns.

Timothy Plan Emerging Markets A (TPEMX): 2.58% expense ratio, 1.2%. TPEMX 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 -2.53% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Royce Micro-Cap Conservative (RYMCX): This fund has an expense ratio of 2.73% and management fee of 1.25%. RYMCX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With an annual average return of 1.35% 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

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.

TIAA-CREF Real Estate Security Retirement (TRRSX): 0.76% expense ratio and 0.48% management fee. TRRSX is a Sector - Real Estate fund, and these kinds of mutual funds typically invest in eeal estate investment trusts (REITs) due to their taxation rules. With an annual return of 11.58% over the last five years, this fund is a winner.

AB Large Cap Growth K (ALCKX) has an expense ratio of 0.96% and management fee of 0.51%. ALCKX 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 annual returns of 14.3% over the last five years, this is a well-diversified fund with a long track record of success.

DFA Enhanced US Large Company I (DFELX) has an expense ratio of 0.15% and management fee of 0.2%. DFELX 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 yearly returns of 10.79% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

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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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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