A well-diversified portfolio can mitigate risk and help you achieve higher returns. Some investors pick individual stocks and monitor their portfolios, but it can take a lot of time to stay on top of each holding that is contributing to your wealth (or not).
Mutual funds streamline the investing process. Instead of buying numerous shares of different companies, you can buy one mutual fund and instantly have a diversified portfolio. Stock investors can also benefit from these funds, which can act as safety nets in case their individual investments don’t perform well.
Some of the best mutual funds have a minimum investment requirement of $3,000 or more, most notably some of Vanguard’s high-quality lineup. However, those who don’t have that minimum to invest right off the bat may be in search of funds that are a little more accessible. Spoiler alert: They often perform just as well.
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Some no-minimum mutual funds mirror a benchmark, while others are actively managed. In addition to minimum investment requirements, investors should consider a fund’s expense ratio, historical returns, asset allocation and other factors before deciding if it’s a good fit.
Investors seeking easy entry to the best mutual funds for their financial goals may want to start their search with the following top choices. Each of these funds has no minimum investment requirement other than the cost of the initial shares:
| Mutual fund | Expense ratio |
| Fidelity Nasdaq Composite Index Fund (ticker: FNCMX) | 0.29% |
| Schwab International Index Fund (SWISX) | 0.06% |
| BlackRock Exchange Portfolio (STSEX) | 0.77% |
| Fidelity 500 Index Fund (FXAIX) | 0.015% |
| Neuberger Berman Small Cap Growth Fund (NSRSX) | 0.81% |
| Fidelity Large Cap Growth Index Fund (FSPGX) | 0.035% |
| Schwab Total Stock Market Index Fund (SWTSX) | 0.03% |
Fidelity Nasdaq Composite Index Fund (FNCMX)
Fidelity has numerous mutual funds that do not have minimum investment requirements. FNCMX tracks the Nasdaq Composite Index and has an annualized return of 15.1% over the past 10 years. The mutual fund has a 0.29% net expense ratio.
Most of the fund’s capital is allocated toward large growth stocks with a strong focus on the information technology sector. Almost half of the fund’s total capital resides in that sector, with communications services (14.5%), consumer cyclical (13.7%) and health care (7.5%) getting the next-highest weightings.
Like many funds, FNCMX places a strong focus on the Magnificent Seven stocks. Microsoft Corp. (MSFT) is the largest holding, with a concentration of about 12%, while Apple Inc. (AAPL) comes in second with 11.6% of the fund’s total assets. Amazon.com Inc. (AMZN) (6.5%), Nvidia Corp. (NVDA) (6.2%) and Meta Platforms Inc. (META) (3.5%) are in the next top positions. The fund’s total weighting in Alphabet Inc. (GOOG, GOOGL) is about 7% if you combine Class A and Class C shares. Overall, more than 95% of the fund’s total assets are in corporations based in the U.S.
Schwab International Index Fund (SWISX)
The Schwab International Index Fund gives investors exposure to large-cap non-U.S. corporations in the stock market. This fund offers diversification for investors who allocate most of their capital to U.S.-based companies, offering a blend of growth and value stocks for a rock-bottom 0.06% expense ratio.
SWISX has its assets spread across numerous stocks instead of concentrating heavily on a few picks. The fund’s top position is Novo Nordisk A/S (NVO) (2.3%), and the next-highest weightings are in ASML Holding NV (ASML) (2.3%), Nestlé SA (OTC: NSRGY) (1.7%), Toyota Motor Corp. (TM) (1.5%) and LVMH Moët Hennessy – Louis Vuitton (OTC: LVMUY) (1.5%).
Most of the fund’s assets are in the financial services sector (18%), followed by industrials (17%), health care (13%) and consumer cyclical (12%). SWISX also offers a 3.2% trailing dividend yield.
The mutual fund has a 10-year annualized return of 4.9%, but its five-year return is a bit higher, at 6.9%.
BlackRock Exchange Portfolio (STSEX)
STSEX does not have a minimum investment requirement, but it does come with a higher 0.77% expense ratio. However, the higher cost comes with excellent returns over the long run. BlackRock’s mutual fund has an amazing 15-year annualized return of 14.1%. The five-year return is even more impressive, at 15.6%.
The fund’s top three sectors are technology (35%), financial services (28%) and health care (15%). If you want to invest in STSEX, then you must like Microsoft’s stock. The fund has a 34% concentration in MSFT, so the tech giant’s performance will heavily impact this fund’s total return. Lucky for investors in STSEX, Microsoft is up by more than 250% over the past five years as of March 18, so it’s been more than a solid pick for the fund.
The other top holdings in STSEX include Berkshire Hathaway Inc. (BRK.B) (12%), General Dynamics Corp. (GD) (9%), and JPMorgan Chase & Co. (JPM) (7%). More than 90% of the fund’s total assets are in U.S. companies, and it has only 26 equity holdings at present.
Fidelity 500 Index Fund (FXAIX)
The Fidelity 500 Index Fund uses the S&P 500 as its benchmark. The fund has an annualized return of 12.7% over the past 10 years, and the five-year annualized return is an impressive 14.8%. Investors keep most of those gains, since the fund has a tiny 0.015% expense ratio.
Since FXAIX mirrors the S&P 500, you will see the members of the Magnificent Seven topping the fund’s portfolio holdings. Microsoft (7.2%), Apple (6.6%), Nvidia (3.7%), Amazon (3.5%) and Meta (2.1%) are the top five holdings. The fund also has a combined 3.8% concentration in Alphabet if you count both Class A and Class C shares.
The fund has 503 equity holdings and allocates 31% of its total assets to its top 10 stocks. The top three sectors covered by FXAIX are technology (30.5%), health care (12.8%) and financial services (12.7%). More than 99% of the fund’s assets are in U.S.-based corporations.
Neuberger Berman Small Cap Growth Fund (NSRSX)
Neuberger Berman Small Cap Growth is for investors who want to take more risks. The fund has a five-year annualized gain of 8.5%, a three-year annualized loss of 1.8%, and a 26% one-year gain. The fund has outperformed the S&P 500 and Nasdaq Composite so far this year, but its volatility and higher expenses keep it from being the best choice for retirees.
NSRSX prioritizes small-cap growth stocks and has a 0.81% expense ratio. The fund’s capital is spread across several sectors, with technology (28%), industrials (24%) and health care (22%) in the top three.
The small-cap growth fund’s top three holdings are Rambus Inc. (RMBS) (4.5%), Super Micro Computer Inc. (SMCI) (3.6%) and e.l.f. Beauty Inc. (ELF) (2.4%). The latter stock has gained more than 2,000% over the past five years.
However, the fund’s biggest winner has been Super Micro Computer. The AI server stock has been the big story in the stock market lately, and helped NSRSX outperform the Nasdaq and the S&P 500 so far this year.
SMCI shares are up by 948% over the past year as of March 18, which illustrates that even if you don’t want to invest in NSRSX, reviewing its portfolio holdings periodically can help you detect hot stocks before they attract broader audiences.
Fidelity Large Cap Growth Index Fund (FSPGX)
The Fidelity Large Cap Growth Index Fund aligns its holdings to mirror the total return of large-cap U.S. corporations. The large-cap growth fund has a reasonable 0.035% expense ratio and offers exposure to 443 equity holdings.
The Magnificent Seven get most of the fund’s assets, with Microsoft (12%), Apple (11%), Nvidia (6%), Amazon (6%) and Meta (3.5%) leading the way. FSPGX also offers a combined 6.3% exposure to Alphabet through its Class A and Class C shares.
The fund has more than half of its assets allocated to its top 10 holdings, so it makes sense that almost half of its total funds are in the technology sector. The consumer cyclical (14.8%) and communication services (11.6%) sectors round out its top three concentrations.
This relatively new fund has a five-year annualized return of 18.4%. Not surprisingly, it’s up a stunning 44% over the past year, thanks to AI stocks’ long run.
Schwab Total Stock Market Index Fund (SWTSX)
The Schwab Total Stock Market Index Fund uses the Dow Jones U.S. Total Stock Market Index as its benchmark. It charges a 0.03% expense ratio and has generated an annualized return of 11.9% over the past 10 years.
Although the fund has 3,409 holdings, you won’t be surprised by its top positions. The fund’s top 10 stocks compose 28% of its total assets, and Microsoft (6.2%), Apple (5.3%), Nvidia (3.9%), Amazon (3.2%) and Meta (2.2%) are its top picks. Alphabet also has a 3% position in the portfolio if you include both Class A and Class C shares.
The technology sector represents 30% of the fund’s total assets, with financial services (13%) and health care (13%) rounding out the list of top sectors.
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7 Best Mutual Funds With No Minimum Investment originally appeared on usnews.com
