Back to top

Image: Bigstock

Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - November 20, 2019

Read MoreHide Full Article

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.

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.

Matthews Korea Fund (MAKOX): 1.18% expense ratio and 0.66% management fee. MAKOX is classified as a Pacific Rim - Equity fund, and these types of mutual funds see big investment opportunities in the dominant export-focused markets of Hong Kong, Singapore, Taiwan, and Korea. With a five year after-costs return of 0.98%, you're for the most part paying more in charges than returns.

Templeton Foreign C (TEFTX): 1.81% expense ratio, 0.69%. TEFTX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. This fund has yearly returns of -1.5% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Thornburg Limited Term Municipal CA C (LTCCX - Free Report) : This fund has an expense ratio of 1.21% and management fee of 0.49%. LTCCX is a Muni - Bonds mutual fund, which focus their investments on debt securities issued by state and local governments; these are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. With an annual average return of 0.96% 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

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.

Janus Henderson Research D (JNRFX) is a winner, with an expense ratio of just 0.68% and a five-year annualized return track record of 11.42%.

T. Rowe Price QM US Small Cap Growth Equity (PRDSX): Expense ratio: 0.79%. Management fee: 0.64%. PRDSX is one of many Small Cap Growth mutual funds; these funds tend to create their portfolios around stocks with market capitalization of less than $2 billion. PRDSX has managed to produce a robust 11.07% over the last five years.

MFS Mid-Cap Growth Fund A (OTCAX) has an expense ratio of 1.12% and management fee of 0.71%. OTCAX 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. With annual returns of 12.28% 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.

Do You Know the Top 9 Retirement Investing Mistakes?

Whether you're planning to retire early or not, don't let investing mistakes derail your plans.

If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Thornburg Ltd Term MuniCA C (LTCCX) - free report >>

Published in