3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - March 16, 2020

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 coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.

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.

HSBC Frontier Markets A (HSFAX): This fund has an expense ratio of 1.85% and a management fee of 1.25%. 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. HSFAX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Snow Capital Small Cap Value Institutional (SNWIX): 1.25% expense ratio, 0.95%. SNWIX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. This fund has yearly returns of 0.39% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Causeway Global Absolute Return Investor (CGAVX): Expense ratio: 1.53%. Management fee: 1.1%. CGAVX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. With annual returns of just -2.53%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

3 Top Ranked Mutual Funds

Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.

Franklin DynaTech Adviser (FDYZX) is a fund that has an expense ratio of 0.6%, and a management fee of 0.46%. FDYZX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. With yearly returns of 16.78% over the last five years, this fund clearly wins.

Victory RS Global Growth R (RGGKX) has an expense ratio of 1.1% and management fee of 0.8%. RGGKX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. Thanks to yearly returns of 15.47% over the last five years, RGGKX is an effectively diversified fund with a long reputation of solidly positive performance.

Johnson Enhanced Return Fund (JENHX): Expense ratio: 0.3%. Management fee: 0.35%. JENHX 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. JENHX has produced a 11.78% over the last five years.

Bottom Line

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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Zacks Investment Research