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Grab These 3 Under-$100 Mutual Funds in January

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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. On the other hand, there are low-cost mutual funds with decent returns where investors can invest as little as $100.

Furthermore, a variety of fund houses offer mutual funds with a minimum initial investment amount of $3,000 or higher. This is why people 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.

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 Capital & Income Fund (FAGIX - Free Report) seeks to offer a combination of income and capital growth. The fund may invest a majority of its assets in equity and debt securities, which may include defaulted securities. The fund, which invests in U.S. and non-U.S. issuers alike, invests in companies that may not be in a good financial condition.

This High Yield-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 4.3% and 6.3%, respectively.

FAGIXhas an annual expense ratio of 0.67%, which is below the category average of 1.00%.

Lord Abbett Convertible Fund Class F (LBFFX - Free Report) 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 18% over the three-year and 15.8% over the five-year benchmarks.

LBFFXhasan annual expense ratio of 0.96%, which is below the category average of 1.17%.

AB Large Cap Growth Fund Advisor Class (APGYX - Free Report) seeks long-term appreciation of capital. The fund invests primarily in equity securities of a limited number of large and high-quality U.S. companies, selected for their growth potential within different market sectors. The fund invests primarily in common stocks of large-capitalization companies.

This 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 19% and 17.2%, respectively.

APGYXhas an annual expense ratio of 0.61%, which is below the category average of 1.04%.

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