Vanguard raises its minimum investment for accounts

NEW YORK (Dow Jones/AP) -- The Vanguard Energy Fund said this week it is raising its investment minimum in an effort to stem the flow of new money into the fund, which has more than doubled in size over the past year to $3.3 billion.
Effective immediately, the minimum investment for all new accounts is $25,000, up from $3,000 previously.
Raising investment minimums is one of several steps fund companies can take to slow investment flows in order to keep assets in a portfolio at more manageable levels. In addition to putting the fund out of reach for smaller investors who can't meet the investment minimum, it also encourages wealthier investors who may be chasing the fund's recent strong returns to stop and think before investing.
This means investors who do buy shares are less likely to pull their money out when the energy sector starts to cool off.
Smooth returns
Morningstar analyst Langdon Healy said the Vanguard Energy Fund, which is sub-advised by Wellington Management Co., may not be the best choice for those who are wildly bullish on energy stocks anyway. That's because its portfolio manager, Karl Bandtel, keeps the fund's returns relatively smooth by focusing on stocks of large integrated oil companies.
For the year to date through Wednesday, the Vanguard Energy Fund was up 7.5 percent, compared with a 0.25 percent rise in the S & amp;P 500 and a gain of 5.28 percent by the average natural resources fund. In the past three years it has produced annualized returns of 9.28 percent, according to Morningstar.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.