Minimum Investment
The smallest dollar or share quantity that an investor can purchase when investing in a specific security or fund. Most often seen in relation to mutual funds, minimum investments are also found consistently in fixed-income securities (where $1,000 units is typically the smallest cut allowed), hedge funds, collateralized mortgage obligations and limited partnerships, among others. Investopedia Says:
Minimum investment amounts for mutual funds can stretch anywhere from $0 all the way to $1 million or more (for institutional share classes). Hedge fund minimum investments can be even larger, as can some limited partnerships and unit investment trusts. For retail investors, there remains a large selection of funds that have modest minimum investments of a few hundred dollars.
A big factor for a fund manager in determining a minimum investment size is the strategy and liquidity demands of the fund itself. By setting a high minimum investment, fund managers can effectively weed out short-term investors and regulate cash inflows to the fund, which can be helpful for day-to-day management of the assets. Related Terms:
Fund Manager
Hedge Fund
Institutional Shares
Minimum Deposit
Retail Investor
Unit Investment Trust - UIT |