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1.
Most funds, after they close to new investors, experience worsened tax efficiency.
True. When funds close, returns may slow and tax efficiency may worsen.
2.
If a fund is going to close, what's the best way to do it?
Announce a target asset size and close when it reaches that target. Funds that close at preset targets tend to continue to perform well after their closings.
3.
With regard to funds that are closing, it's best to _______.
Buy a fund after it reopens. Reopening is often a sign that an asset class is being overlooked.
4.
Closings work best for which types of funds?
Funds that traffic in illiquid securities such as micro- and small-cap stocks. Closings are also good ideas for funds with a small number of managers and analysts, or those that employ rapid-trading strategies.
5.
Some fund companies make plans to close even before they roll out.
