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The concept of mutual funds is easier to understand by considering it as an investment vehicle. Many investors invest their pool of money to invest in securities that include; money market, stock, and bonds. These funds are operated by mutual fund managers. There are numerous types of mutual funds to choose from to invest in. some of these types include; equity funds, fixed income funds, index funds, balanced funds etc.

If you are a new investor in this sector, then not all types of mutual funds will welcome you. There are some types of mutual funds that do not welcome newcomers or new investors. Why so?

Well, doors to mutual funds are shut down only when the size begins to slow down the objective of the fund manager. More and more investors are attracted towards the fund that produces phenomenal results and profits although this looks like an advantage it definitely is not. Soon after more investors become a part of the fund, it begins to draw way more revenue as compared to the fund manager. With more and more money from rolling in from the investors, the fund manager is forced to invest in stocks that are less in conviction just so the money is utilized. This results in the creation of a pause or halt on the fund’s performance and ends up being seen with small-cap funds.

This is a major problem that is why there are some funds that shut their entries for the new investors. These mutual funds include;

• Vanguard PRIMECAP Core Fund:

In the year 2009, Vanguard closed the doors to the new investors when the AUM began to touch the $4 billion mark. Moreover, Vanguard also limited it to the existing shareholders only. The performance of solid funds and the small new investment have raised the bar to $7 billion but it still remains closed for the new investors.

• Fidelity Small Cap Discovery Fund:

This fund closed its door for the new investors in 2013. In 2012, the funds here reached to $4 billion which was the approximately the doubled amount as compared to previous year. The fidelity small cap discovery fund has maintained the five-star Morningstar, Inc. for the past ten years despite the rapidly increasing assets under their management.

• JPMorgan Mid Cap Value Fund Class A:

This fund closed its doors nearly at the same time as the Fidelity Small Cap Discovery Fund which was in the year 2013. The fund manager decided to close the fund and limit the investments for the proper management of the fund due to the rapid increase and phenomenal performance. The fund currently manages $15 billion overall. It has been the longest-tenured fund in the list.

These are the three types of funds that are now closed to new investors and investments and are managing the funds of the already existing shareholders. All these funds closed for nearly the same reason which was high amounts of investments making it difficult for the fund managers to manage the money invested.