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.
Mentioned in ?
References in periodicals archive ?
A middle market private equity firm focused on control transactions, Bertram Capital closed Fund III receiving commitments from over 30 top-tier investors, including endowments, insurance companies, multi-manager funds, consultants, public pensions, corporate pensions and family offices.
Since launching in 2013, Tailwater manages four funds, Tailwater Energy Fund I and II, Tailwater E&P Opportunity Fund I and the recently closed Fund II.
DMP, which was established in 1985, represents the fifth investment made from TVV Capital's most recently closed fund, the buyer said.
But with the focus of the probe settling on so-called "zombie" funds - which are shut to new customers - the major closed fund consolidators remained heavily in the red, with Friends Life insurer Resolution closing 7% down in the FTSE 100 and Phoenix Group plunging 12% in the FTSE 250.
Shari'ah-compliant fund provides investment opportunity in Riyadh's growing residential real estate market NCB Capital has raised SAR 280 million from its private placement that has invested in the NCB Capital Real Estate Development Fund, a closed fund that invests in the development of residential villas in the north of Riyadh.
67 million) invested in its real estate development fund, a closed fund that invests in the development of residential villas in the north of Riyadh.
Both groups appear to be firmly in play after unveiling their tie-up plans two weeks ago, with Swiss insurer Zurich and Old Mutual said to be interested in Friends Provident and closed fund insurer.
For example, Carlton recently brought in a German Closed Fund to complete the $1.
The buyer will act via an affiliate of its recently closed fund, NGP Natural Resources X LP.
A EXISTING customers will be able to invest more but in the longer term a closed fund may not do as well as an actively managed fund.
If you wish to exit a closed fund and your with-profit holding is within a bond, the tax consequences of surrendering should be considered.