Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - March 20, 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.

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.

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.

Great-West Templeton Global Bond (MXGBX): 1.01% expense ratio and 0.58% management fee. MXGBX is a Diversified Bonds mutual fund. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. With a five year after-costs return of 0.86%, you're for the most part paying more in charges than returns.

Eagle MLP Strategy A (EGLAX). Expense ratio: 1.65%. Management fee: 0.58%. Over the last 5 years, this fund has generated annual returns of -9.87%.

Federated International Bond A (FTIIX): Expense ratio: 1.02%. Management fee: 0.7%. FTIIX is an International Bond - Developed mutual fund. Focusing on fixed income securities outside from developed nations besides the U.S., International Bond - Developed funds invest in assets from countries like Japan, Germany, the UK, France, and Australia. With annual returns of just -0.12%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Polen Global Growth Instl (PGIIX): 1.1% expense ratio and 0.85% management fee. PGIIX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With an annual return of 14.88% over the last five years, this fund is a winner.

MFS Growth R6 (MFEKX) has an expense ratio of 0.56% and management fee of 0.55%. MFEKX 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. Thanks to yearly returns of 15.37% over the last five years, MFEKX is an effectively diversified fund with a long reputation of solidly positive performance.

Neuberger Berman Mid Cap Growth Trust (NBMTX) is an attractive fund with a five-year annualized return of 10.76% and an expense ratio of just 0.95%. NBMTX 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.

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