3 Under-$100 Mutual Funds That Should Be on Your Radar

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If you’re just starting out in the world of investing, cheap and low-risk funds should be your focus. To that end, buying mutual funds under $100 is a great way to get started. Obviously, there are plenty of low-priced stocks but it should be noted that stocks may not always provide investors the diversity that mutual funds assure.

Not to mention, risks associated with penny stocks are high. Meanwhile, there are low-cost mutual funds with decent returns where investors can park as little as $100.

That said, a variety of fund houses offer mutual funds with a minimum initial investment amount of $3,000 or higher. For this reason, beginners generally wait to save the minimum amount. However, there is always the risk of losing out on returns due to a late start. To counter this cost-hurdle, one must begin by buying low-cost funds.

However, finding mutual funds under $100 can be quite a task. This is because individual investors, who are just starting out, might find it difficult to screen the best no-load mutual funds for $100 or less. This is because when the amount is as low as $100, it makes more sense to invest most of it and no charge is paid. Funds that carry no sales load and have a relatively low expense ratio should be preferred.

However, prominent firms such as BlackRock, Inc. and The Charles Schwab Corporation offer several high-quality, no-load funds with minimum initial investments of $100 or less. Mutual funds are thus an affordable option for diversity as well as safety.

Why Mutual Funds?

Mutual funds are great options for investors looking for a relatively less risky way to earn at least more than what fixed-income instruments offer. Money from individuals and even organizations are invested in stocks, bonds, or other assets covering diverse industries globally.

One of the benefits of mutual funds is that these allow small investors to park money in a basket of securities at one go. One need not worry about investing a large chunk in securities separately. Moreover, these are less risky than any individual asset class as underperformance of a security gets mitigated by the outperformance of others in the portfolio. In addition to asset diversification, mutual funds provide liquidity and economies of scale, and are professionally managed.

3 Best Funds to Buy Now

Given such circumstances, we have highlighted three funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that investors should consider. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $100.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

Fidelity Select Medical Technology and Devices Portfolio FSMEX fund aims for capital growth. It invests the majority of its assets in companies that are engaged in activities such as research, manufacturing, supply and sale of medical equipment and related technologies. The non-diversified fund invests in common stocks and in U.S. and non-U.S. issuers.

This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 21.6% and 21.8%, respectively.

FSMEX has an annual expense ratio of 0.71%, which is below the category average of 1.22%. Also, the fund carries no sales load.

Lord Abbett Convertible Fund Class F LBFFX seeks current income as well as the opportunity to produce high total return by investing majority of its assets in a diversified portfolio of convertible securities issued by both domestic and foreign companies.

This Convertible Bonds product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 19% over the three-year and 16.6% over the five-year benchmarks.

LBFFXhasan annual expense ratio of 0.96%, which is below the category average of 1.17%. Also, the fund carries no sales load.

Hartford Core Equity Fund Class R4 HGISX seeks capital growth. HGISX invests a huge portion of its assets in common stocks. The fund maintains a diverse portfolio by investing in different companies and industries, with the fund adviser focusing on investing in large-cap companies that have market-cap similar to those included on the S&P 500 index.

This Large Cap Blend product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 24% and 19.8%, respectively.

HGISXhas an annual expense ratio of 0.78%, which is below the category average of 0.91%. Also, the fund carries no sales load.

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