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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - December 23, 2019

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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.

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.

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.

Oppenheimer SteelPath MLP Alph Plus A (MLPLX - Free Report) : 2.8% expense ratio and 1.25% management fee. MLPLX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. With a five year after-expenses return of -12.4%, you're mostly paying more in fees than returns.

ClearBridge Intl Small Cap A2 . Expense ratio: 1.63%. Management fee: 1.25%. Over the last 5 years, this fund has generated annual returns of -0.97%.

Optimum Small Mid-Cap Value C (OCSVX - Free Report) - 2.21% expense ratio, 0.95% management fee. OCSVX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. OCSVX has generated annual returns of 1.86% 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.

AB Small Cap Growth I (QUAIX - Free Report) is a winner, with an expense ratio of just 0.9% and a five-year annualized return track record of 12.07%.

Principal Large Cap Growth I R4 (PPUSX - Free Report) : Expense ratio: 0.97%. Management fee: 0.6%. PPUSX 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. PPUSX has managed to produce a robust 11.17% over the last five years.

TIAA-CREF Real Estate Security Institutional (TIREX - Free Report) : Expense ratio: 0.51%. Management fee: 0.48%. Sector - Real Estate funds like TIREX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. TIREX has produced a 11.85% over the last five years.

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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