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My mutual fund is closing, what should I do?

fund closing

fund closing

New York -- When your mutual fund closes, your actions should depend on what type of closing is occurring:

Full Closures - Full closures refer to a complete liquidation of a mutual fund's investment portfolio and distribution of assets to mutual shareowners. If you are in a closed-end mutual fund and your shares are currently trading at a premium to the underlying assets, you should consider selling your shares to retain this premium. If your shares are trading at discount - hold on - the assets must be distributed to the shareowners so eventually - you should receive the full value of the assets. If you are in an open (not closed) mutual fund, we generally believe selling immediately is a good move. If your mutual fund held a large portion of a small stock, it takes time to dispose of the shares. This selling pressure generally pushes the price of the small stock down which in turn lowers your net asset value.

New investor closures - New investor closures occur when a mutual fund closes itself to new investors. Typically, existing investors are allowed to continue to add new investments. New investor closures typically bring about a rush by all investors, existing and new, to add additional money to the fund. Funds typically close because the mutual fund manager believes that their fund has become too big to manage and no longer want inflows from other investors. Although we do not believe new investor closures should trigger an immediate decision to sell all holdings, we do believe that performance should be closely watched. If other investors decide to withdraw their investments, the fund could be forced to liquidate holdings. This results in a distribution of gains and or losses and could cause a decrease in net asset value and negative tax implications to occur.

An independent Fee-Only Financial Adviser can help you determine the best strategy to take when your mutual fund is closing.

Source: For more information or to get connected to a FEE-ONLY financial adviser, money manager, CPA or Attorney, visit America's Favorite Independent Advisory Network at or 1800ADVISER.COM.


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