When Fund Rules Change

It's fairly common for mutual fund companies to change the minimum amounts they require new investors to pony up when entering a fund.

If it occurs with a fund you're already invested in, it's probably nothing to worry about. In fact, it may even be a good thing. But there are a few points you should keep in mind.

"It's not the kind of thing that happens all the time, but [changing minimum investment requirements] is pretty common," says Christine Benz, director of mutual fund analysis for Morningstar. Generally, she adds, the trend has been for minimums to increase: The universe of investments available for less than $1,000 up front is very small.

A primary reason a fund may increase its minimums is if it's experiencing huge inflows, as is often the case with hot sectors -- think of energy over the past few months. When this happens, the fund's manager may have trouble putting all the money to work. In some cases, the fund may simply close to new investors, but often it will raise its initial investment requirements.

The Vanguard Group has been most notable in raising its minimums, Benz says. The company previously increased the required initial investments on both its VGENXVanguard Energy fund and VASVXVanguard Selected Value fund to $25,000 from $3,000 "to put a chill on really hot asset inflows." (In some cases, if a fund does raise minimums for this reason, it may turn around and lower fees once the sector cools.)