3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - March 20, 2020

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.

Eaton (NYSE:ETN) Vance Short Duration Government Income C (ECLDX): 1.45% expense ratio and 0.5% management fee. ECLDX is a Government Mortgage - Short mutual fund; these funds focus on the mortgage-backed securities (MBS) market and specifially, securities that have less than three years until maturity. With a five year after-expenses return of 0.87%, you're mostly paying more in fees than returns.

AB International Value C (ABICX): 2.22% expense ratio, 0.75%. ABICX 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 1.78% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

BlackRock (NYSE:BLK) Eurofund R (MREFX) - 2.01% expense ratio, 0.75% management fee. MREFX is a Europe - Equity mutual fund investing in stocks across the vast European continent. MREFX has generated annual returns of 1.85% over the last five years. Ouch!

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.

Boston Trust SmMid Cap Fund (BTSMX): 0.75% expense ratio and 0.75% management fee. BTSMX is a Mid Cap Blend mutual fund that typically features a portfolio filled with stocks of various sizes and styles; it allows for a diversification strategy focusing on companies with market caps between $2 billion and $10 billion. With an annual return of 10.66% over the last five years, this fund is a winner.

Dreyfus US Equity Fund Y (DPUYX) has an expense ratio of 0.8% and management fee of 0.75%. DPUYX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. With annual returns of 11.77% over the last five years, this is a well-diversified fund with a long track record of success.

KP Large Cap Equity Institutional (KPLCX): Expense ratio: 0.3%. Management fee: 0.24%. KPLCX 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. KPLCX has produced a 11.41% over the last five years.

Bottom Line

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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Zacks Investment Research