Closed To New Accounts

Dictionary Says

Definition of 'Closed To New Accounts'


When an investment vehicle is no longer accepting new investors, but is still operating for existing investors. This can apply to mutual funds, hedge funds or any professionally managed pooled investment vehicle. In addition, institutional money managers may close certain portfolio groups to new accounts, while leaving others open. There will be an "as of" date when the fund will officially close to new investors. Depending on the situation, this may or may not also affect the ability for current investors to add to their holdings in the fund.


Investopedia Says

Investopedia explains 'Closed To New Accounts'


The managers of a fund can choose to close for new investors for several reasons, but the most noticeable is to control the size of the fund and to lower the administrative costs. Generally speaking, the smaller a fund, the more nimble it can be and the more markets in which it can participate.

Some mutual funds become so large that monthly inflows can amount to billions of dollars. Over time, the expected return from new money will drag down the returns of current investors.
Closing a fund off to new accounts is only one method of controlling the asset base's growth. Other means include raising the minimum investment amount and/or stopping existing investors from contributing more to the fund.


comments powered by Disqus
Hot Definitions
  1. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
  2. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
  3. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  4. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  5. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  6. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
Trading Center