Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - October 24, 2019
You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
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.
Invesco Gold & Precious Metals A (IGDAX): 1.47% expense ratio and 0.75% management fee. IGDAX is classified as a Sector - Precious Metal fund, and these mutual funds invest in stocks with a focus on the mining and production of precious metals like gold, silver, platinum, and palladium. With a five year after-expenses return of -0.79%, you're mostly paying more in fees than returns.
Touchstone Ultra Short Duration Fixed Income A (TSDAX): 0.69% expense ratio, 0.25% management fee. TSDAX 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. This fund has an annual returns of -0.65% over the last five years. Another fund guilty of having investors pay more in fees than returns.
AB Allocation Market Real Return I (AMTIX) - 0.85% expense ratio, 0.75% management fee. This fund has yielded yearly returns of -2.29% in the course of the last five years. Too bad!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
MFS Research R5 (MFRKX) is a winner, with an expense ratio of just 0.48% and a five-year annualized return track record of 11.1%.
Janus Henderson Enterprise N (JDMNX): Expense ratio: 0.66%. Management fee: 0.64%. JDMNX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. JDMNX has managed to produce a robust 14.98% over the last five years.
TIAA-CREF Real Estate Security Retail (TCREX) is an attractive fund with a five-year annualized return of 11.53% and an expense ratio of just 0.81%. TCREX 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.
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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