|
Mutual fund minimums
|
 |
June 20, 1997: 2:56 p.m. ET
As bull market continues, small investors find it pricier to take part
From Correspondent Carmine Gallo
|
NEW YORK (CNNfn) - Some mutual funds are hiking the minimums they charge to get started -- and critics wonder if that will begin shutting out the small investor.
Charles Schwab, which operates one of the largest of the mutual fund "supermarkets," is boosting the price of admission. Beginning July 3rd, it will increase the initial investment minimum for most of its mutual funds to $2,500. This comes just two years after it hiked the minimum from $250 to $1,000.
A Schwab spokesman says the move is intended to keep costs under control since the administrative costs of all accounts, no matter how small, are the same. But critics say small investors could end up getting punished.
"It might force [investors] to be concentrated in one fund or one style because of the limited amount of capital they have," said Andrew Mehalko, research director for DCA Global Investment. (WAV 73K) or (AIFF 73K)
Other fund companies also have been hiking minimum requirements to open a fund. According to Morningstar, more than half of all no-load mutual funds have minimums higher than $2,500.
Small investors haven't been shut out everywhere. Many funds allow individuals to open accounts with as little as $100 a month, as long as they enroll in automatic investment plans.
"If I'm doing that, I'm a lot smarter than the big investor who [is jumping] in and out of funds. He's going to get hurt trying to time the market. I'm okay because I'm dollar-cost averaging, which is actually the smarter way to invest," says Morningstar analyst Pat Regnier.
Fund companies also like this arrangement because it offers a predictable and consistent source of cash.
|
|
|
Charles Schwab & Co.
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
