4 Ways to Get Access to Institutional Funds
Institutional funds, which are designed (not unexpectedly) for institutional investors such as pension funds, have extraordinarily low expense ratios that make them particularly attractive investments. Unfortunately, these funds also have breathtakingly high initial purchase requirements: to qualify as an institutional fund as fund-watcher Morningstar defines it, the minimum initial purchase must be at least $100,000, and many have initial purchase requirements in the millions or even billions of dollars. How can an ordinary investor get shares in such a fund?
401(k)s and other employer-sponsored retirement plans often have access to institutional funds, especially if the employer is a large one. That's because the total of all the employees' investments in the 401(k) plan may be enough to meet those high initial purchase requirements. Check your available investments for your 401(k), and if one of them has the word "institutional" in the fund name, you're in luck.
If you don't have any institutional funds in your 401(k), ask your plan administrator if it's possible to substitute an institutional version of one of the existing funds. If your company's 401(k) plan is large enough to qualify, there's no reason why you and your fellow employees shouldn't be able to enjoy those ultra-low expense ratios.
Source: Fool.com
