Mutual fund are allow to buy stock in company which stock price has to trade in minimum $6 or $10 per share?

Answer 1

There are no legal restrictions on the price of shares that mutual funds may buy. There are, however, practical considerations, such as the reporting requirements and potential sale restrictions if the fund owns more than 5% of a company, so the funds tend to avoid very small capitalization companies (regardless of share price).

Answer 2

There are no restrictions, only logistical ones.

Think of it from the standpoint of a manager of billions of dollars in a major Mutual Fund. I saw a list of the top MF's, and the largest was over 150 billion dollars and the smallest was 18 billion.

Now a billion is hard to imagine, but it's 1,000 times a million.

So if this money manager wants to invest in small companies, but not own them or be a major shareholder, how much can he invest in one company? Maximum is less than $10 million.

He could invest in 100 of these small companies, maybe, and still only use a fraction (1 billion) of his assets. He still hasn't made a dent in his investment workload, but he's worked his tail off to find 100 companies to invest in.

If 10% or 20% of these small companies doubled in price (unlikely), it still wouldn't effect the bottom line of this MF significantly. And so, all of that work essentially for nothing.

Stand under?