3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - January 23, 2020
Zacks Investment Research | Jan 22, 2020 08:36PM ET
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.
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.
Goldman Sachs (NYSE:GS) N-11 Equity Fund A (GSYAX): Expense ratio: 1.72%. Management fee: 1.13%. After expenses, the 5 year return is -3.83%, meaning your fees are far higher than the fund's returns.
AllianzGI Global Natural Resources C (ARMCX): 2.18% expense ratio, 1.15% management fee. ARMCX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. This fund has an annual returns of -3.57% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Franklin Real Return A (FRRAX) - 0.88% expense ratio, 0.63% management fee. FRRAX is a Government - Bonds fund, which holds securities issued by the U.S. federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary. FRRAX has generated annual returns of 0.08% over the last five years. Ouch!
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.
Janus Henderson Enterprise Institutional (JAAGX) is a fund that has an expense ratio of 0.72%, and a management fee of 0.64%. JAAGX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. With yearly returns of 14.98% over the last five years, this fund clearly wins.
Hartford Healthcare Fund HLS IA (HIAHX) has an expense ratio of 0.9% and management fee of 0.84%. HIAHX is classified as a Sector - Health fund. Healthcare is one of the biggest sectors of the American economy, and these kinds of mutual funds provide a great opportunity to invest in this industry. With annual returns of 10.58% over the last five years, this is a well-diversified fund with a long track record of success.
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GMO Quality III (GQETX) has an expense ratio of 0.48% and management fee of 0.48%. GQETX 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 12.04% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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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