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Fund Spy: Morningstar Medalist Edition

These Medalists Are Closed but Left the Backdoor Open

You can get into these great funds if you really want to.

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In recent years, fund companies have experimented with various ways of closing funds. One thing I’ve seen more often is funds closing their doors halfway: They close the fund to investors using fund super­markets but leave them open to those who invest directly with the fund company.

This really serves two purposes. First, it slows down the rate of inflows. Second, it leaves more profits for the fund company because it doesn’t have to pay a No Transaction Fee plan provider like Schwab or Fidelity the usual 35 basis points in fees. I don’t really mind the practice, except that whenever I write about those funds, some readers complain to me that the funds are closed because that’s what it says when you pull up the fund in the NTF supermarkets. So to clear the decks, I thought I’d write about a few of the very best funds in this camp. If you don’t already have an account with that firm, you’ve got to decide whether it’s worth the extra difficulty of having another account.

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