3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - October 16, 2019
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.
Matthews Korea Fund (MAKOX): 1.18% expense ratio and 0.66% management fee. MAKOX is classified as a Pacific Rim - Equity fund, and these types of mutual funds see big investment opportunities in the dominant export-focused markets of Hong Kong, Singapore, Taiwan, and Korea. With a five year after-expenses return of 0.98%, you're mostly paying more in fees than returns.
Templeton Foreign C (TEFTX): 1.81% expense ratio, 0.69%. TEFTX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has yearly returns of -1.5% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Vanguard Market Neutral I (VMNIX) - 1.35% expense ratio, 0.13% management fee. VMNIX 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. VMNIX has generated annual returns of -0.8% over the last five years. Ouch!
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.
Janus Henderson Global Technology D (JNGTX) is a winner, with an expense ratio of just 0.84% and a five-year annualized return track record of 18.78%.
Commerce Growth Fund (CFGRX) has an expense ratio of 0.75% and management fee of 0.4%. CFGRX 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 14.37% over the last five years, this is a well-diversified fund with a long track record of success.
AQR Large Cap Defensive Style I (AUEIX) has an expense ratio of 0.4% and management fee of 0.25%. AUEIX 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 13.91% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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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