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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - November 21, 2019

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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.

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.

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.

American Funds ST Bond Fund of America 529C (CCAMX): 1.47% expense ratio and 0.28% management fee. CCAMX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. With a five year after-costs return of 0.28%, you're for the most part paying more in charges than returns.

Principal International Emerging Markets R5 (PEPSX): 1.42% expense ratio, 1.19%. PEPSX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. This fund has yearly returns of 0.99% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Muhlenkamp Fund (MUHLX - Free Report) - 1.13% expense ratio, 1% management fee. This fund has yielded yearly returns of -0.1% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.

Rydex Nova Investor (RYNVX) is a fund that has an expense ratio of 1.35%, and a management fee of 0.75%. RYNVX 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 yearly returns of 13.24% over the last five years, this fund clearly wins.

ClearBridge Small Cap Growth F1 (LMPSX) is a stand out fund. LMPSX 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. With five-year annualized performance of 10.75% and expense ratio of 1.2%, this diversified fund is an attractive buy with a strong history of performance.

Nicholas II Fund (NCTWX) has an expense ratio of 0.61% and management fee of 0.52%. NCTWX 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 11.42% over the last five years, this fund is a well-diversified fund with a long track record of success.

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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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.


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