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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - February 20, 2020

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If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink 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.

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.

AB Unconstrained Bond K : 0.9% expense ratio and 0.5% management fee. AGSKX is classified as a Diversified Bonds fund, which offers exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. With a five year after-expenses return of 0.5%, you're mostly paying more in fees than returns.

American Funds ST Bond Fund of America R4 (RAMEX - Free Report) : RAMEX 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. RAMEX offers an expense ratio of 0.69% and annual returns of 0.65% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.

Pacific Advisors Mid Cap Value A : Expense ratio: 6.75%. Management fee: 1%. PAMVX is a Mid Cap Blend mutual fund. These funds usually seek a stock portfolio of various size and style, which allows for diversification when the focus is on companies with a market cap in the range of $2 billion to $10 billion. With annual returns of just -3.97%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Putnam Global Technology R (PGTRX - Free Report) : Expense ratio: 1.41%. Management fee: 0.62%. With a much more diversified approach, PGTRX--part of the Sector - Tech mutual fund category--gives investors a way to own a stake in the notoriously risky tech sector. This fund has achieved five-year annual returns of an astounding 19.82%.

Hirtle Callaghan Institutional Growth Equity HCS (HCIGX - Free Report) is a stand out fund. HCIGX is an All Cap Growth mutual fund. In order to increase diversification, these funds have holdings across small, medium, and large-cap levels. With five-year annualized performance of 14% and expense ratio of 0.23%, this diversified fund is an attractive buy with a strong history of performance.

MFS New Discovery R4 (MNDJX - Free Report) is an attractive fund with a five-year annualized return of 13.45% and an expense ratio of just 1.05%. MNDJX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets.

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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