DEFINITION of 'Closed Fund'

A mutual fund that has been closed - either temporarily or permanently - to new investors because the investment advisor has determined that the fund's asset base is getting too large to effectively execute its investing style.

BREAKING DOWN 'Closed Fund'

Generally, current shareholders in a closed mutual fund are permitted to continue investing in the fund, but sometimes they are also be precluded from making additional investments.

A closed mutual fund should not be confused with a closed-end fund. This type of fund has a fixed number of shares, generally invests in specialized sectors, and is structured and listed as a stock on a stock exchange.

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