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Does Your Retirement Portfolio Hold These 3 Mutual Fund Misfires? - February 27, 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 Century Short Term Government A (TWAVX - Free Report) : This fund has an expense ratio of 0.81% and a management fee of 0.54%. 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. TWAVX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

FPA Capital Fund (FPPTX - Free Report) . Expense ratio: 0.93%. Management fee: 0.54%. Over the last 5 years, this fund has generated annual returns of -1.04%.

Ivy Limited-Term Bond C (WLBCX - Free Report) : This fund has an expense ratio of 1.67% and management fee of 0.46%. WLBCX is an Investment Grade Bond - Short option; these funds focus on the short end of the curve, generally with bonds that mature in less than two years. With an annual average return of 1.02% 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 we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.

GMO Quality IV (GQEFX - Free Report) is a fund that has an expense ratio of 0.44%, and a management fee of 0.44%. GQEFX 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 yearly returns of 12.08% over the last five years, this fund clearly wins.

Nationwide Growth Fund A (NMFAX - Free Report) has an expense ratio of 0.9% and management fee of 0.6%. NMFAX 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 annual returns of 11.76% over the last five years, this is a well-diversified fund with a long track record of success.

T. Rowe Price Mid-Cap Growth R (RRMGX - Free Report) has an expense ratio of 1.27% and management fee of 0.61%. RRMGX 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 12.17% over the last five years, this fund is a well-diversified fund with a long track record of success.

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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