Performance of Mutual Funds Before and after Closing to New Investors

Posted: 16 Jun 1998

See all articles by Herman Manakyan

Herman Manakyan

Western Kentucky University - Department of Accounting and Finance

Kartono Liano

Mississippi State University - Department of Finance and Economics

Abstract

This study examines the decision to close mutual funds to new investors due to the growth of the funds' assets. The evidence indicates that funds perform better three years prior to closing to new investors than they do afterwards. Furthermore, the evidence indicates that the closed funds outperform the control portfolios of funds with similar investment objectives and asset size during the one- and three-year periods prior to closing. However, there is no significant difference in the performance of closed funds and their matched control portfolios during the one- and three-year periods after closing. Although the primary reason given for closing the funds is the desire to maintain performance in the face of growing assets, the strategy does not appear successful in accomplishing this objective.

JEL Classification: G12, G14

Suggested Citation

Manakyan, Herman and Liano, Kartono, Performance of Mutual Funds Before and after Closing to New Investors. Available at SSRN: https://ssrn.com/abstract=95648

Herman Manakyan (Contact Author)

Western Kentucky University - Department of Accounting and Finance ( email )

1 Big Red Way
Bowling Green, KY 42101
United States
502-745-2925 (Phone)
502-745-5284 (Fax)

Kartono Liano

Mississippi State University - Department of Finance and Economics ( email )

P.O. Box 9580
Mississippi State, MS 39762
United States
601-325-1981 (Phone)
601-325-1977 (Fax)

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