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3 Top Under-$100 Mutual Funds to Add to Your Portfolio

Nitish Marwah

For beginners who don’t want to risk much, investing in 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. Moreover, risks associated with penny stocks are higher. Meanwhile, there are low-cost mutual funds with decent returns where investors can invest as little as $100.

A variety of fund houses offer mutual funds with minimum initial investment amount of $3,000 or higher. For this reason, beginners generally wait to save up for 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 best no-load mutual funds for $100 or less.

Notably, a $100 bet will make more sense when the bulk of the amount is invested and no charges are paid from it. Funds that carry no sales load and have a relative low expense ratio should be preferred.

Although Vanguard Investments and Fidelity Investments offer some of the best no-load funds, their minimum initial investments are as high as $3,000 and $2,000, respectively. Beginners are not always fortunate to have a couple of thousand dollars at their disposal.

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 apart from being a safer investment bet.

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 a small investor to park money 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 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) or 2 (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 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.

Schwab Monthly Income Fund - Maximum Payout SWLRX seeks to primarily provide current income and secondarily, capital growth. The fund invests in a combination of Laudus funds and Schwab funds that are on par with its target asset allocation. 

This Sector — Allocation Balanced product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 4% over the three-year and 3.1% over the five-year benchmarks.

SWLRXcarries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.22%, which is below the category average of 0.68%. Also, the fund carries no sales load.

Laudus U.S. Large Cap Growth Fund LGILX seeks long-term capital appreciation, and invests at least 80% of its net assets in equity securities of large-cap U.S. companies. Additionally, up to 20% of LGILX’s assets may be invested in foreign equity securities.

This Sector – Large Cap Growth 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 17.3% and 13.4%, respectively.

LGILX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.75%, which is below the category average of 1.05%. Also, the fund carries no sales load.

AB Large Cap Growth Fund Class K ALCKX seeks long-term capital appreciation, and invests in equity securities of a limited number of large, carefully selected, high-quality U.S. companies. The fund normally invests the lion’s share of its assets in common stocks of large-cap companies. However, at times, the fund may invest in shares of exchange-traded funds instead of making direct investments in securities.

This Sector – Large Cap Growth 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 16.3% and 14.3%, respectively.

ALCKXcarries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.97%, which is below the category average of 1.05%. Also, the fund carries no sales load.

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