Markets

3 Mutual Funds Under $100 That Will Lead to Greater Returns

If you’re just starting out in the world of investment, 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.

At the same time, we know that a number of issuers offer mutual funds with minimum initial investment amount of $3,000 or higher. For this reason, aspirants generally wait to save up for the minimum amount. However, there is always the opportunity cost of losing out on returns if you choose to wait. 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 makes more sense when most of it is invested and no charge is paid from it. Funds that carry no sales load and have a relatively 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 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 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 Financial Services Portfolio FIDSX fund aims for capital growth. FIDSX primarily invests its assets in securities of companies principally engaged in financial services sector activities. The fund mostly invests in common stocks of both U.S. and non-U.S. companies. 

This Sector-Finance product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 0.3% over the three-year and 3.7% over the five-year benchmarks.

FIDSX has an annual expense ratio of 0.77%, which is below the category average of 1.43%. Also, the fund carries no sales load.

DFA International Sustainability Core 1 Portfolio DFSPX fund invests a major portion of its net assets in equity securities. It may gain exposure to companies associated with approved markets by purchasing equity securities in the form of depositary receipts, which may be listed or traded outside the issuer's domicile country.

This Sector – Non Us-Equity 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 1% and 2.8%, respectively.

DFSPX has an annual expense ratio of 0.33%, which is below the category average of 0.98%. Also, the fund carries no sales load.

Goldman Sachs Dynamic Municipal Income Fund Investor Class GUIRX seeks growth of income, which is free from regular federal income tax. GUIRX invests a large chunk of its assets in fixed income securities, which are issued by or on behalf of U.S. territories and states. These fixed income securities offer regular federal income tax-exempted interest.

This Muni-Bonds 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 3.7% and 3.8%, respectively.

GUIRX has an annual expense ratio of 0.50%, which is below the category average of 0.74%. Also, the fund carries no sales load.

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>


Click to get this free report

Get Your Free (FIDSX): Fund Analysis Report

Get Your Free (GUIRX): Fund Analysis Report

Get Your Free (DFSPX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Mutual Funds

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More