EVERY WEEK WE

champion the virtues of judging thousands of mutual funds based on low costs, good long-term performance and highly experienced management. But at the end of our stories you may notice that we also regularly screen on another piece of data that doesn't get a lot of attention: the minimum investment.

We usually nix funds that require their newest shareholders to pony up more than $5,000 when they first buy shares. This week, though, we reduced that amount to just $500. We started with a universe of 2,751 funds. That group was narrowed by looking at their track records and their annual expenses. The list below contains 19 equity funds.

We have always considered low-minimum funds to be great starter kits for young investors or for those who may not be sitting on a big wad of cash. They can also help you cheaply fill in any holes in your portfolio that may not be covered by a static index fund. The list below contains a socially responsible fund, a religiously focused one, both growth and value offerings and some well-respected actively-run products, too. As a group, these funds have returned an annual average of 13.2% and 15.7% over the last three- and five-year periods, respectively. That's around three percentage points better than the S&P 500 index in each case.

However, we would never suggest screening only on low minimums. That's because low minimums have very little to do with performance. Indeed, low minimums can actually hamper returns. When a fund lowers its barriers to entry it can attract thousands of new customers. That means higher printing, mailing and record-keeping costs. Big fund families can spread those expenses across their entire lineup, while smaller shops may have a harder time pulling that off. In any case, all those costs eventually come out of investors' pockets. "A lot of new people and few assets will likely lead to higher fees," says Lipper senior analyst Jeff Tjornehoj. (The funds on our list have an average annual expense ratio of 0.75%, half the cost we typically use as a cutoff.)

There are other reasons not to worry too much about low minimums. In most cases, the funds we kicked to the curb this week will allow investors to buy shares without a minimum purchase if they are investing through an individual retirement account and making regular contributions. Usually a brokerage house will negotiate a deal so that its clients get around the initial limit, too. "It's a nice back door," says Tjornehoj. And don't forget about the merits of high minimums. For example, Vanguard ratchets up its minimums to cool off hot funds or those that are ballooning in assets. Vanguard will also greatly reduce the annual expenses on some of its funds if you invest $100,000 right off the bat.

One fund that makes a return appearance on our list is Homestead Value. The stock-picking skills of this fund's trio of managers have been on display this year. The fund has traditionally held a large portion of financial stocks. (Its position currently stands at 22% of the portfolio, according to Morningstar.) These stocks have been hammered by the subprime and credit crises. That should have dinged this fund, too, especially since it is concentrated in just 48 stocks. Indeed, it owns Citigroup, Fifth Third Bancorp and CIT Group. Those three names are down an average 36.7% this year. But the fund is up almost 6% in 2007 thanks to other holdings like Marathon Oil, Parker-Hannifin and Flowserve. Granted, the fund has slipped a little. But it still ranks in the top quintile over the previous three- and five-year time periods. Interested? It only costs $500 to get in.

The Criteria
We limited our list this week to no-load funds that required a minimum investment under $500. In addition, the funds had to charge less than a 1.5% annual expense ratio and be open to new money. Finally, their tracks over the trailing three- and five-year periods had to be in the top 40% of their peer groups.