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.

That said, 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 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 cumbersome. 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 relative 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.

4 Best Funds to Buy Now

Given such circumstances, we have highlighted four funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that investors should consider. Moreover, these funds have encouraging one and three-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.

Columbia Thermostat Fund Institutional 3 Class (CYYYX Quick QuoteCYYYX - Free Report) aims for capital appreciation in the long term. The fund invests primarily in other funds that seek to achieve their investment objective by investing in a selected group of underlying stocks, bond mutual funds and ETFs. CYYYX allocates the lion’s share of its net assets among the portfolio funds according to the current level of Standard & Poor's (S&P) 500 Index.

This Allocation Balanced product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the one and three-year benchmarks are 27.6% and 14.3%, respectively.

CYYYX has an annual expense ratio of 0.56%, which is below the category average of 1.36%.

Lord Abbett Short Duration Income Fund Class R6 (LDLVX Quick QuoteLDLVX - Free Report) aims for high income that is at par with capital preservation. The fund primarily invests in short-duration debt or fixed-income securities. The fund invests the majority of its assets in investment grade debt securities, which may consist of corporate debt securities of U.S. issuers and non-U.S. issuers.

This Govt Bond-Short product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 2.7% over the one-year and 3.6% over the three-year benchmarks.

LDLVXhasan annual expense ratio of 0.34%, which is below the category average of 0.72%.

Fidelity Select Utilities Portfolio (FSUTX Quick QuoteFSUTX - Free Report) aims for capital growth. The non-diversified fund invests the majority of its assets in securities of companies primarily engaged in the utilities industry and companies generating most of their revenues from their utility operations. FSUTX invests in U.S. and non-U.S. companies alike.

This Sector-Utilities product has a history of positive total returns for over 10 years. Specifically, the fund has returned 10.2% over the past three years.

FSUTXhas an annual expense ratio of 0.75%, which is below the category average of 1.10%.

VALIC Company I Small-Mid Growth Fund seeks appreciation of capital by investing mainly in common stocks of companies that exhibit growth potential. The fund invests the lion’s share of its assets in net assets in equity securities of small- and mid-cap companies located in domestic markets.

This All Cap Growth product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the one and three-year benchmarks are 50.9% and 23.7%, respectively.

VSSGXhas an annual expense ratio of 0.96%, which is below the category average of 1.16%.

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