3 Best Mutual Funds under $100 for 2017
Small investors, who are trying to build a portfolio with potential to yield consistent return, need not worry much because there is a way out to diversify your portfolio with an investment of less than $100. True, there are plenty of stocks available for less than a penny, but these stocks are pretty risky.
Moreover, investing an amount less than $100 in mutual funds can assure more diversification compared to investing in stocks. Mutual funds that have an entry fee below $100 in addition to no sales load and low expense ratios make the choice easier for investors. Also, mutual funds with the above mentioned features and potential of providing stable returns always remain on investors’ radar.
Mutual Fund Investing below $100
One of the benefits of mutual funds is that it allows a small investor to invest in a basket of securities at one go. Investors 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 outperformance of others in the portfolio. In addition to the asset diversification, mutual funds also provide liquidity, economies of scale, and are professionally managed.
It is a relatively better bet if one can derive the above benefits by investing an amount less than $100. Moreover, prominent firms including Fidelity, Franklin and BlackRock have a strong track record of providing mutual funds with no minimum entry fee.
In addition to under $100 funds, many fund families have provisions for automatic investment program (AIP) or dollar-cost averaging that allow investors to make regular fixed investments in funds following an initial purchase. Investors opting for AIP are well poised to protect their portfolio from market volatility.
A under $100 investment cannot make an investor rich. It can only get someone started and the actual returns come when the amount invested is sizable and locked in for a considerable time. So, this can double up as a great retirement plan as well.
Which Categories to Invest In?
In addition to low-cost choices, fund categories are also important. Investors who are comparatively new often avoid taking high risks and try to invest in securities that can provide stable returns. Mutual funds from categories including dividend growth, large-cap and allocation balance have the potential to offer stability to one’s portfolio. Dividend investing has always been a popular choice as it has the potential to yield steady returns during a high volatility environment. While dividend payments supplement gains during an uptrend, it helps to limit losses incurred during a market downturn.
Separately, large-cap funds are expected to provide long-term performance history and assure more stability than mid or small caps. This makes large-cap funds an excellent choice for investors seeking a steady income flow. Meanwhile, allocation balanced mutual funds are believed to provide greater returns than pure, fixed income investments while maintaining a low volatility level. The proportion of equity and fixed income investments in these funds may also vary in response to market conditions.
3 Top-Ranked Mutual Funds under $100
A below $100 bet will make more sense when the bulk of that amount is invested and no charges are paid from it. We have screened funds that have no minimum initial investment, carry no sales load and have relatively low expense ratios. In addition, we have only considered mutual funds that carry a Zacks Rank Mutual Fund Rank #1 (Strong Buy). These funds have also registered healthy returns over the past few years.
Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify the 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 their likely future success.
Fidelity Dividend Growth K FDGKX invests primarily in companies that pay dividends or that Fidelity Management & Research Company (FMR) believes have the potential to pay dividends in the future. FDGKX returned 19.4% over the last one year period and has three-year annualized returns of 6.9%. Annual expense ratio of 0.49% is significantly below the category average of 1.01%.
Transamerica Large Cap Value I2 TWQZX invests the major portion of its assets in securities of large-cap companies that are believed to be undervalued. TWQZX returned 32.5% over the last one year period and has three-year annualized returns of 11%. Annual expense ratio of 0.68% is significantly below the category average of 1.07%.
Fidelity Balanced K FBAKX invests around 60% of its assets in equity securities and allocates rest of the assets in debt securities including bonds. FBAKX returned 16.8% over the last one year period and has three-year annualized returns of 6.5%. Annual expense ratio of 0.45% is significantly below the category average of 0.86%.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank.
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