Fidelity to Close Second Small-Cap Fund to New InvestorsChristopher Condon
Fidelity Investments, the second-biggest mutual fund manager in the U.S., plans for the second time this year to bar new investors from a fast-growing fund focused on small-company stocks.
The $3.5 billion Fidelity Small Cap Value Fund will take deposits only from existing shareholders beginning March 1, the Boston-based company said today in a statement. The fund, which has outperformed 95 percent of peers in the past year after returning 19 percent, saw assets rise 41 percent in the year ended Jan. 31, according to data compiled by Bloomberg.
“Small Cap Value Fund has experienced a steadily growing asset base and more recently strengthening investor cash flows,” Brian B. Hogan, president of Fidelity’s equity group, said in the statement. “We’ve analyzed the situation closely, and believe that it’s in the interests of shareholders to close the fund to new investors at this time.”
Fidelity said Jan. 16 it would close its Small Cap Discovery Fund to new investors by the end of that month after assets almost doubled in the prior year. The fund, which returned 7.8 percent in January, saw assets surge 27 percent during the month to $4.9 billion, according to data compiled by Bloomberg. Small-cap U.S. mutual funds gathered $2.5 billion in assets in the period, according to Chicago-based research firm Morningstar Inc.
Asset managers sometimes close funds to new investors after large deposits, which can make it difficult to invest money as effectively as existing assets.