Closed Fund
What is a Closed Fund?
Closed funds are mutual funds that are presently not emerging shares to new customers. The shut down on emerging shares may be a temporary measure, or may be enduring. However, new investors are not able to acquire any shares associated with a closed fund. Brokers and other financial professionals are able to access information about the current status of a mutual fund, and determine if is currently open or closed. The concern may be that the mutual fund as currently structured will become impossible to manage if any further growth is achieved.
In other instances, the fund managers may feel that any further expansion will result in harm to the integrity of the fund’s performance, and thus endanger the investments already made in the fund. The closed fund may function with some limited purchases of existing shares among current shareholders, or all buying activity may be suspended. A closed fund may be declared open in the event that the fund managers determine that the reasons for suspending the issuing of shares are no longer valid. Generally a closed fund takes place when the mutual fund has grown too large.
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