American Century Investments plans to stop waiving fund minimums on new accounts established with its automatic monthly investment program.
The Kansas City, Mo., company waives its usual minimums of $2,500 to $10,000 on 24 funds if clients agree to invest at least $50 a month.
After Oct. 1, people opening accounts in those funds must meet the minimums. Existing accounts will not be affected, the company said.
Chris Doyle, a spokesman, said the change was made because small accounts generate little profit for the company. A $500 or $600 account, for example, brings in less than $5 in management fees per year.
And investors who use the automatic monthly investment program often do not meet their goals, such as building a war chest for college or retirement, he said.
"Historically they rarely reach a level where you could say definitely these people have reached their goal," Mr. Doyle said.
He said American Century remains committed to smaller investors and is not dropping the automatic monthly investment program.
The company has 70 mutual funds and $90 billion of assets under management.