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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - February 07, 2020
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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.
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 Short Term Bond Fund of America R2E (RAAEX - Free Report) : This fund has an expense ratio of 1.18% and a management fee of 0.27%. 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. RAAEX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Invesco Global Mkt Neutral Fd Cl A : 1.49% expense ratio, 0.95%. MKNAX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. This fund has yearly returns of -5.02% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Goodwood SMID Cap Long/Short Institutional : This fund has an expense ratio of 1.35% and management fee of 0.84%. GAMIX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With an annual average return of -2.04% 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 you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Columbia Acorn European Adv (CLOFX - Free Report) is a fund that has an expense ratio of 1.19%, and a management fee of 1.16%. CLOFX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With yearly returns of 10.74% over the last five years, this fund clearly wins.
Principal Large Cap Growth I R6 (PLCGX - Free Report) : Expense ratio: 0.59%. Management fee: 0.6%. PLCGX 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. PLCGX has managed to produce a robust 15.39% over the last five years.
Davenport Small Cap Focus Fund (DSCPX - Free Report) : Expense ratio: 0.97%. Management fee: 0.75%. DSCPX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. DSCPX has produced a 10.67% 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).
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.
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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - February 07, 2020
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.
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 Short Term Bond Fund of America R2E (RAAEX - Free Report) : This fund has an expense ratio of 1.18% and a management fee of 0.27%. 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. RAAEX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Invesco Global Mkt Neutral Fd Cl A : 1.49% expense ratio, 0.95%. MKNAX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. This fund has yearly returns of -5.02% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Goodwood SMID Cap Long/Short Institutional : This fund has an expense ratio of 1.35% and management fee of 0.84%. GAMIX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With an annual average return of -2.04% 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 you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Columbia Acorn European Adv (CLOFX - Free Report) is a fund that has an expense ratio of 1.19%, and a management fee of 1.16%. CLOFX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With yearly returns of 10.74% over the last five years, this fund clearly wins.
Principal Large Cap Growth I R6 (PLCGX - Free Report) : Expense ratio: 0.59%. Management fee: 0.6%. PLCGX 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. PLCGX has managed to produce a robust 15.39% over the last five years.
Davenport Small Cap Focus Fund (DSCPX - Free Report) : Expense ratio: 0.97%. Management fee: 0.75%. DSCPX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. DSCPX has produced a 10.67% 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).
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.