That creates a tension between the manager who takes pride in crushing the competition and the fund company that makes more money when assets increase. It's no wonder, then, that funds often close when the damage is already done. Meg, as of trying to prevent the situation from worsening. He discovered that closed funds on average went from performing in the top 20 percent of their categories in the three years before closing to just average performance for the three years following closing. There's some good news in all this.
Closing can work, if it's planned in advance.
That's because the fund company gives some thought to how much money the fund can handle, then commits to closing it at that point. Most of the funds in Russ's study, meanwhile, closed only after the company finally woke up to size problems. Let's take an example. And if they did, they didn't tell anyone. Compare that with the recently launched Bogle Small Cap Growth.