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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - March 04, 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 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.
Federated Fund for US Government Security B : 1.72% expense ratio and 0.41% management fee. FUSBX is a Government Mortgage - Intermediate fund, focusing on the mortgage-backed securities (MBS) market and securities with at least three years to maturity but less than 10. With a five year after-expenses return of 0.71%, you're mostly paying more in fees than returns.
AB Allocation Market Real Return K (AMTKX - Free Report) : AMTKX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. AMTKX offers an expense ratio of 1.27% and annual returns of 0.8% 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.
Thornburg Limited Term Municipal CA C (LTCCX - Free Report) : This fund has an expense ratio of 1.21% and management fee of 0.49%. LTCCX is a Muni - Bonds fund; these funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. With an annual average return of 0.97% 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.
William Blair Large Cap Growth N (LCGNX - Free Report) is a fund that has an expense ratio of 1%, and a management fee of 0.6%. LCGNX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With yearly returns of 15.32% over the last five years, this fund clearly wins.
Principal Capital Appreciation R4 (PCAPX - Free Report) : Expense ratio: 0.87%. Management fee: 0.47%. PCAPX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. PCAPX has managed to produce a robust 11.31% over the last five years.
Nicholas Limited Edition (NCLEX - Free Report) : Expense ratio: 0.87%. Management fee: 0.75%. NCLEX 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. NCLEX has produced a 10.77% 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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3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - March 04, 2020
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 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.
Federated Fund for US Government Security B : 1.72% expense ratio and 0.41% management fee. FUSBX is a Government Mortgage - Intermediate fund, focusing on the mortgage-backed securities (MBS) market and securities with at least three years to maturity but less than 10. With a five year after-expenses return of 0.71%, you're mostly paying more in fees than returns.
AB Allocation Market Real Return K (AMTKX - Free Report) : AMTKX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. AMTKX offers an expense ratio of 1.27% and annual returns of 0.8% 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.
Thornburg Limited Term Municipal CA C (LTCCX - Free Report) : This fund has an expense ratio of 1.21% and management fee of 0.49%. LTCCX is a Muni - Bonds fund; these funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. With an annual average return of 0.97% 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.
William Blair Large Cap Growth N (LCGNX - Free Report) is a fund that has an expense ratio of 1%, and a management fee of 0.6%. LCGNX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With yearly returns of 15.32% over the last five years, this fund clearly wins.
Principal Capital Appreciation R4 (PCAPX - Free Report) : Expense ratio: 0.87%. Management fee: 0.47%. PCAPX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. PCAPX has managed to produce a robust 11.31% over the last five years.
Nicholas Limited Edition (NCLEX - Free Report) : Expense ratio: 0.87%. Management fee: 0.75%. NCLEX 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. NCLEX has produced a 10.77% 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.