What is a Closed Fund?
A closed fund is one, which is not open to new business. Investors have a total of 95 billion tied up in closed with-profits funds via endowments, bonds and pensions. Another 332 billion is in funds that are still open for business. How could I be affected if my fund closes? These investors linked with closed funds are likely to suffer, as when a fund closes, it typically moves away from investing in shares, and prefers fixed-interest, lower risk assets, such as bonds/cash. As these assets bear lower risk, there is every chance they will yield lower returns, which will ultimately be reflected in the bonus rates distributed to the investor. As these closed funds are no longer competing for new investors, bonus rates tend to be lower than their contemporaries, and in some cases have been completely removed. Over time, charges related to a closed fund may rise because a life insurance company has substantial fixed costs. These may be spread amoung increasingly fewer people as some are abl
A closed fund is more like a stock than a regular mutual fund. Other terms that you might run across for it is closed-end fund, publicly-traded fund or closed-end investment company. Michelle Smith and the Mutual Fund Education Alliance have this definition for a closed-end investment company, “An investment company that offers a limited number of shares. They are traded in the securities markets, usually through brokers. Price is determined by supply and demand.
