Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - November 08, 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.
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.
Catalyst Hedged Futures Strategy I (HFXIX): This fund has an expense ratio of 2.08% and a management fee of 1.75%. 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. HFXIX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Thomas White International Fund (TWWDX): 1.24% expense ratio, 0.85%. TWWDX 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 1.01% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Wells Fargo Short Duration Government C (MSDCX) - 1.55% expense ratio, 0.35% management fee. MSDCX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. MSDCX has generated annual returns of 0.28% over the last five years. Ouch!
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.
Hartford Core Equity Y (HGIYX) is a fund that has an expense ratio of 0.42%, and a management fee of 0.35%. HGIYX 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 12.33% over the last five years, this fund clearly wins.
Principal Blue Chip Fund I (PBCKX): Expense ratio: 0.66%. Management fee: 0.66%. PBCKX 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. PBCKX has managed to produce a robust 15.39% over the last five years.
MFS Growth Fund I (MFEIX) has an expense ratio of 0.66% and management fee of 0.55%. MFEIX 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. With annual returns of 14.5% 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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