The old saying "You get what you pay for" doesn't necessarily hold true for mutual funds.
Lots of funds that won't let you in for less than $25,000 or $50,000 lag behind the market and their peers. Conversely, many of those with initial investment minimums of $1,000 or less put up long-term numbers most fund managers would envy.
It's pretty ironic, but I'm glad that's the way it is. It's hard enough getting a jump on building wealth without having to come up with a huge wad of cash just to get started. So why should great growth funds be exclusive to those with a lot of money to invest?
Well, they shouldn't. And fortunately, investors can get into one of the world's best growth funds for a mere $500. After that, you can add as little as $100 at a time.
As the following table shows, the fund has beaten the market and its peers by substantial margins in the short- and long-term. And it has often been noticeably less risky than the broader market, as indicated by its beta of 1.0 over the past year.
As the benchmark, the market itself has a beta of 1.0. A beta of less than 1 means a stock or other security is less volatile than the market. The lower the beta, the less volatile a security is relative to the market.
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You may have noticed the fund -- Nicholas (NICSX) -- is in the mid-growth category. That may be the case officially. But at this point in the fund's five-decade history, it's more like a large-cap fund in many ways, with a favorable risk profile compared to the market being just one of them.
Indeed, large-cap stocks (those with market values greater than $10 billion) account for about 56% of NICSX's $2.7 billion in net assets. As a group, the stocks in the portfolio have an average market value of $20 billion, far larger than the category average of $8.4 billion.
This is partly because some of these stocks ballooned to large sizes over the years. However, the fund recently acquired shares of companies that were large-caps already. One is the $330 billion tech giant Microsoft (Nasdaq: MSFT), which NICSX first bought last September.
Faster-growing smaller companies still make up a sizable portion of the fund's assets, though. Indeed, around 40% of the fund is in mid-cap stocks -- those with a market value of $1 billion to $10 billion. About 4% is in small companies, those worth less than $1 billion. Overall, I like the mix of larger and smaller stocks in NICSX because it helps keep risk in check yet also provides plenty of growth opportunities that can continue to lead the fund to long-term outperformance.