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Fund Spy

Buy These Funds While You Still Have a Chance

These keepers have closed before, so don't dawdle.

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One of the few good things about the 2007-09 bear market was that a number of fine stock funds that had been closed to new investors reopened. As the asset bases of these funds shrank--the result of falling share prices and shareholder withdrawals--managers concluded that they could safely accept new cash without hurting their ability to run the funds efficiently. Despite the stock market's robust rebound over the past year, most of these reopened funds haven't been overwhelmed with new money. As a result, they're still open--but that may not be the case for long.

There's a lot to be said for a fund that doesn't hesitate to close to new investors so that its managers can preserve the strategy that built its great record.

Beat the Rush
I've identified three standout funds that are open now but have closed in the past. Given the lack of cash infusion, they probably won't close soon. But because these funds boast strong long-term records, it wouldn't take much of a runup to persuade investors to send them money. Rather than waiting for the rush, buy the funds now, enjoy excellent performance before they close, then relax after they shut.

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Russel Kinnel has a position in the following securities mentioned above: VHCOX, RYSEX. Find out about Morningstar’s editorial policies.