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Minimum amount to keep in mutual fund when selling in order to stay in a closed fund
The prospectus says that: "If at any time your account balance falls below the applicable minimum initial investment amount [$2500, or $1,000 for IRA] ... in this Prospectus due to redemptions, a letter may be sent advising you to add to your account to meet the applicable minimum account balance, ... or to redeem the remaining shares in your account. If action is not taken within 30 days of the notice, the Fund may require mandatory redemption of shares"
So the fund itself may require you to keep at least $2500 (or $1K), but this is at its discretion. I've owned two funds at Vanguard where I dropped below Admiral level thresholds. Vanguard forced a downgrade conversion to Investor class shares for one of the fund. The other fund Vanguard left alone. Discretion.
Then there is the fact (I assume from your post) that you're investing through Fidelity. Fidelity generally sets a $2500 min for fund investments (except for its own funds). Whether it requires one to keep $2500 in a fund is something I don't know. Regardless, whether it would enforce such a rule is up to Fidelity. Then there is the question of whether Fidelity would tell Seafarer if you dropped below its minimum requirement.
In any case, it seems that $2500 would be safe. The actual minimum, however, could be lower. That's what is hard to say.
If at any time your account balance falls below the applicable minimum initial investment amount for the share class and type of account described under “Investment Minimums” in this Prospectus due to redemptions, a letter may be sent advising you to add to your account to meet the applicable minimum account balance, to transfer your shares to another share class of the Fund for which you are eligible, or to redeem the remaining shares in your account. If action is not taken within 30 days of the notice, the Fund may require mandatory redemption of shares, or the Fund may elect to transfer the shares to another share class of the Fund for which you are eligible. The Fund may adopt other policies from time to time requiring mandatory redemption of shares in certain circumstances, such as to comply with new regulatory requirements.
Each Fund reserves the right to waive or change investment minimums, and delegates such authority to Seafarer. Employees of the Adviser and their family members are not subject to any initial or subsequent investment minimums. "
Brokerages are a little hard to say, but probably follow the prospectus when in doubt.
I also have had positions in brokerages with less than the required minimum amount for years with no notice; however, I have had some MF positions with less than the required minimum amount when they eventually caught up with me after several years and forced me to liquidate my position or buy more.
Unfortunately, it is hard to buy more shares when the fund is hard closed or you transfer existing position from one brokerage to a new brokerage that does not have an agreement on file to purchase more shares in that particular fund.
Comments
The prospectus says that: "If at any time your account balance falls below the applicable minimum initial investment amount [$2500, or $1,000 for IRA] ... in this Prospectus due to redemptions, a letter may be sent advising you to add to your account to meet the applicable minimum account balance, ... or to redeem the remaining shares in your account. If action is not taken within 30 days of the notice, the Fund may require mandatory redemption of shares"
So the fund itself may require you to keep at least $2500 (or $1K), but this is at its discretion. I've owned two funds at Vanguard where I dropped below Admiral level thresholds. Vanguard forced a downgrade conversion to Investor class shares for one of the fund. The other fund Vanguard left alone. Discretion.
Then there is the fact (I assume from your post) that you're investing through Fidelity. Fidelity generally sets a $2500 min for fund investments (except for its own funds). Whether it requires one to keep $2500 in a fund is something I don't know. Regardless, whether it would enforce such a rule is up to Fidelity. Then there is the question of whether Fidelity would tell Seafarer if you dropped below its minimum requirement.
In any case, it seems that $2500 would be safe. The actual minimum, however, could be lower. That's what is hard to say.
Here is an excerpt from the 8/31/19 prospectus for Seafarer:
https://www.sec.gov/Archives/edgar/data/915802/000139834419015471/fp0044912_485bpos.htm
..."Small Account Balances / Mandatory Redemptions
If at any time your account balance falls below the applicable minimum initial investment amount for the share class and type of account described under “Investment Minimums” in this Prospectus due to redemptions, a letter may be sent advising you to add to your account to meet the applicable minimum account balance, to transfer your shares to another share class of the Fund for which you are eligible, or to redeem the remaining shares in your account. If action is not taken within 30 days of the notice, the Fund may require mandatory redemption of shares, or the Fund may elect to transfer the shares to another share class of the Fund for which you are eligible. The Fund may adopt other policies from time to time requiring mandatory redemption of shares in certain circumstances, such as to comply with new regulatory requirements.
Each Fund reserves the right to waive or change investment minimums, and delegates such authority to Seafarer. Employees of the Adviser and their family members are not subject to any initial or subsequent investment minimums. "
Brokerages are a little hard to say, but probably follow the prospectus when in doubt.
Unfortunately, it is hard to buy more shares when the fund is hard closed or you transfer existing position from one brokerage to a new brokerage that does not have an agreement on file to purchase more shares in that particular fund.