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A situation in which a mutual fund sells shares in itself so quickly and successfully that it has difficulty finding appropriate investments in which to place all of its capital. An overgrown mutual fund may have difficulty maintaining a diversified portfolio of securities and may be forced to take larger positions in the securities it already has. As a result, the fund may acquire greater risk and become a victim of its own success.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Rapid growth in the sales of a mutual fund's shares to the extent that the fund has difficulty finding promising new investments or it must take such large positions in individual investments that its trading flexibility is reduced. In other words, a very successful fund may grow so large that the fund may have trouble sustaining its success.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.