3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - March 27, 2020

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.

How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.

AQR Multi Strategy Alternative N (ASANX): This fund has an expense ratio of 2.23% 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. ASANX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Oppenheimer SteelPath MLP Alph Plus I (MLPNX): MLPNX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. MLPNX offers an expense ratio of 2.55% and annual returns of -9.31% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.

RBC Emerging Markets Small Cap Equity A (RSMAX): This fund has an expense ratio of 1.7% and management fee of 1.25%. RSMAX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With an annual average return of 0.16% 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

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.

MFS Global New Discovery R6 (GLNNX) is a fund that has an expense ratio of 1.16%, and a management fee of 0.98%. GLNNX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. With yearly returns of 11.3% over the last five years, this fund clearly wins.

Oppenheimer Gold & Special Mineral I (OGMIX) has an expense ratio of 0.75% and management fee of 0.68%. OGMIX 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. Thanks to yearly returns of 11.71% over the last five years, OGMIX is an effectively diversified fund with a long reputation of solidly positive performance.

General Electric (NYSE:GE) RSP Mutual Fund (GESSX) has an expense ratio of 0.14% and management fee of 0.1%. GESSX 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 10.75% over the last five years, this fund is a well-diversified fund with a long track record of success.

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