closed fund

Closed fund

A mutual fund that is no longer issuing shares, mainly because it has grown too large.

Closed Fund

A mutual fund that is closed to new investors, whether permanently or temporarily. A mutual fund's management may decide to close the fund because it may believe that there are too many investors and/or assets in the fund to generate a return appropriate to its investment strategy. Sometimes such a fund prevents even current investors from buying more shares of the fund, although this is less common. A closed fund should not be confused with a closed-end fund, which is a different concept altogether.

closed fund

A mutual fund that no longer issues shares to nonshareholders but that may continue to sell shares to existing shareholders. A fund usually closes because its management has decided the fund has grown too large to be managed effectively.
Case Study Mutual funds that have closed to new investors sometimes reopen. Managers may close a fund to new shareholders for several reasons. A fund may grow so large in assets that the portfolio becomes difficult to effectively manage. Large investment positions in individual securities can be difficult to acquire or sell without affecting the prices of securities. Thus, portfolio managers of very large funds lose flexibility because they are mostly limited to owning the stocks of large corporations with huge numbers of shares outstanding. Likewise, a mutual fund that specializes in the investments of a relatively narrow market segment may have limited investment options. A fund that concentrates on investing in small-capitalization firms or companies from developing countries is likely to face limited share availability. Investors may pour money into a successful mutual fund that the portfolio manager is unable to invest. Mutual funds often close after strong asset growth from a long bull market. For example, Janus Capital closed 7 of its 21 funds in a two-year period beginning in mid-1998. Closed funds included the popular Janus Fund, which had grown in size to $52 billion of assets. A fund that has been closed may subsequently reopen if the fund size shrinks or if the portfolio manager believes new investment opportunities have become available. A bear market may reduce the size of a fund because of reduced stock values and as a result of share redemptions by the fund's shareholders. A smaller fund means reduced income to the fund's managers, who may decide to reopen the fund to new investors. In late 2000 Fidelity Investments announced that it would reopen both its Contrafund and Growth & Income Portfolio funds to new investors after holders had withdrawn nearly $11 billion by redeeming the funds' shares.
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References in periodicals archive ?
The closed fund is used to pay clergy pensions for those in service before 1998 and to support cathedrals, bishops and parishes in the most needy areas of the country.
Each closed Fund remains open to additional investments by existing investors and, to a limited extent, initial investments by institutional investors approved by the Fund's investment adviser.
The National Audit Office says today the Closed Fund, established to cover the pensions of 33,000 former employees of the old water authorities, is set to run out of assets in 2005.
Existing shareholders in other Royce Funds will not be permitted to open new accounts in Royce Low-Priced Stock Fund, nor will they be permitted to acquire shares of the closed Fund by exchange.
We just closed Fund XI with more than $1 billion in equity, and this acquisition is a strong start for the Fund XI program," said John B.
Existing shareholders in other Royce Funds will not be permitted to open new accounts in Royce Opportunity Fund after May 18, 2007, nor will they be permitted to acquire shares of the closed Fund by exchange.
We spoke with a random sampling of fund companies imposing a 12b-1 fee on their closed fund and found that most consider the 12b-1 a necessary fee to charge since the fund remained open to existing investors," explains Phil Edwards, Standard & Poor's Managing Director of Funds Research.
IRVING, Texas -- NGP Midstream & Resources ("M&R") announces that it has closed Fund I on November 16, 2007 with investment commitments totaling $1.
Standard & Poor's believes that Equitable Life will manage the closed fund in order to at least meet guaranteed obligations.
Standard & Poor's also believes it is now more likely that the existing business could be run off as a closed fund.
5 billion of capital under management, including $400 million raised in a recently closed Fund VI.
The ratings on SPL are based on its very strong capitalization, strong operating performance, and modest capital requirements as a closed fund.