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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - February 25, 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.

High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.

American Funds Short Term Bond Fund of America R2E (RAAEX - Free Report) : 1.18% expense ratio and 0.27% management fee. 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. With a five year after-costs return of 0.1%, you're for the most part paying more in charges than returns.

Leader Total Return A : 2.29% expense ratio, 0.75% management fee. LCATX is an Investment Grade Bond - Intermediate fund, which targets bonds that mature in more than three years but less than 15 years, and are a middle of the curve option for investors. This fund has an annual returns of 0.91% over the last five years. Another fund guilty of having investors pay more in fees than returns.

First Investor International Opportunities Bond A - 1.36% expense ratio, 0.75% management fee. This fund has yielded yearly returns of -1.52% in the course of the last five years. Too bad!

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.

MFS Global New Discovery R4 (GLNMX - Free Report) is a winner, with an expense ratio of just 1.26% and a five-year annualized return track record of 11.19%.

JPMorgan Equity Income Fund R6 (OIEJX - Free Report) has an expense ratio of 0.48% and management fee of 0.4%. OIEJX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of 10.04% over the last five years, this is a well-diversified fund with a long track record of success.

Boston Trust SmMid Cap Fund (BTSMX - Free Report) is an attractive fund with a five-year annualized return of 10.66% and an expense ratio of just 0.75%. BTSMX 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.

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.

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