3 Mutual Fund Misfires To Avoid In Your Retirement Portfolio - October 28, 2019

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.

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.

Goldman Sachs (NYSE:GS) Local Emerging Markets Debt IR (GLIRX): This fund has an expense ratio of 0.96% and a management fee of 0.8%. 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. GLIRX is an International Bond - Emerging option; these funds focus on fixed income securities from a variety of emerging international markets. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Hartford Global Real Asset Y (HRLYX): HRLYX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. HRLYX offers an expense ratio of 0.9% and annual returns of -1.51% 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.

Causeway Global Absolute Return Investor (CGAVX) - 1.55% expense ratio, 1.1% management fee. This fund has yielded yearly returns of -2.61% 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.

JPMorgan (NYSE:JPM) Small Cap Growth Fund R6 (JGSMX): 0.74% expense ratio and 0.65% management fee. JGSMX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With an annual return of 14.09% over the last five years, this fund is a winner.

Principal Capital Appreciation R4 (PCAPX) is a stand out fund. PCAPX 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 five-year annualized performance of 10.76% and expense ratio of 0.87%, this diversified fund is an attractive buy with a strong history of performance.

Janus Henderson Global Technology T (JAGTX) has an expense ratio of 0.93% and management fee of 0.64%. With a much more diversified approach, JAGTX--part of the Sector - Tech mutual fund category--gives investors a way to own a stake in the notoriously risky tech sector. With yearly returns of 18.71% 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).

If you have concerns or any doubts about your investment advisor, read our just-released report:

4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future