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Following Fidelity or Whales Redux

Posted by: Adrienne Carter on April 17, 2006

On the heels of Fidelity’s announcement that it would close Contrafund, the Boston behemoth says it’s going to close two more of its (bloated) funds: Fidelity Growth Company and Fidelity Mid-Cap. Now let me repeat—it’s a really good thing when a fund company closes a fund. Sure, it seems that Fidelity closes these babies a bit late. But hey, better late than never, right?

That got me to thinking. What other funds should be closed to new investors? So I used the handy-dandy Morningstar fund screener to see check out the biggest funds around. Obviously index funds like the Vanguard 500 fund get a pass. Still, there are plenty of whales out there that I think need to be closed.


Frankly, I think many of the American Funds have put on too much weight. Growth Fund of America has more than $141 billion assets. The folks at American Funds would say that their multi-manager approach means they can run huge pools of assets. But come on, how long can you use that excuse. But hey, they have continued to defy odds—producing returns above its peers of 4 to 8 percentage points in each of the past three calendar years. But if i had a wish list of funds I’d like to close, GFA would be on the top. (Of course, I’d also include other American faves like Investment Company of America, EuroPacific Growth, and a number of other biggies in their lineup)

Just so it doesn’t seem like I’m picking on the American Funds, which i really do think is a shareholder-friendly fund company, I’d also include Davis NY Venture. The guys at Davis run a really stellar shop. But between this flagship fund and a number of other portfolios they’re running, I have to wonder whether or not they can handle all that money in the future.

Are there funds out there that you wished were closed to new investors?

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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