Performance of mutual funds before and after closing to new investors |
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| Affiliation: | 1. School of Civil Engineering, Wuhan University, Wuhan, 430072, China;2. CITIC Treated Water Into River Engineering Investment Co., Ltd., Wuhan, 430202, China;3. Department of Electrical and Computer Engineering, University of Alberta, Edmonton, AB, T6R 2V4, Canada;4. System Research Institute, Polish Academy of Sciences, Warsaw, 01-447, Poland;6. Department of Civil and Environmental Engineering, University of Maryland, College Park, United States of America;7. Chaoyang University of Technology, Taichung, Taiwan;8. Institute for Theoretical and Applied Informatics, Polish Academy of Sciences, Gliwice, Poland;1. Key Research Institute of Yellow River Civilization and Sustainable Development, Henan University, Kaifeng, 475001, China;2. Collaborative Innovation Center on Yellow River Civilization jointly built by Henan Province and Ministry of Education, Henan University, Kaifeng, 475001, China |
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| Abstract: | This study examines the decision to close mutual funds to new investors due to the growth of the funds' assets. The evidence indicates that funds perform better three years prior to closing to new investors than they do afterwards. Furthermore, the evidence indicates that the closed funds outperform the control portfolios of funds with similar investment objectives and asset size during the one- and three-year periods prior to closing. However, there is no significant difference in the performance of closed funds and their matched control portfolios during the one- and three-year periods after closing. Although the primary reason given for closing the funds is the desire to maintain performance in the face of growing assets, the strategy does not appear successful in accomplishing this objective. |
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