Fidelity to Close Small-Cap Stock Fund to New InvestorsChristopher Condon
Fidelity Investments, the second-biggest mutual-fund manager in the U.S., said it will close its Small Cap Discovery Fund to new investors after assets almost doubled in the past year to $3.9 billion.
The fund will accept new purchases only from existing investors or through some retirement accounts and financial advisers after Jan. 31, the Boston-based company said today in a statement. Small Cap Discovery, managed by Chuck Myers, has beaten 99 percent of rivals over the past five years, returning an annual average of 15 percent.
“We believe that closing Small Cap Discovery Fund at this time is in the best interests of the fund’s shareholders, and stabilizing cash flows will help Chuck in seeking to maintain the fund’s consistent performance,” Brian B. Hogan, head of Fidelity’s equity group, said in the statement.
Asset managers sometimes close funds to new investors after large deposits, which can make it difficult to invest new money as effectively as existing assets. Small Cap Discovery had the highest return in the past five years, adjusted for price swings, among 89 U.S. funds with assets of more than $1 billion that buy small-capitalization stocks, according to the BLOOMBERG RISKLESS RETURN RANKING. Myers, 37, generated the best total return at 80 percent over the period.
Fidelity, known for its actively-managed stock offerings, oversaw $1.7 trillion in client assets as of Nov. 30. The company last closed an equity mutual fund because of client deposits in June 2006, Sophie Launay, a spokeswoman, said in an interview.