Many popular open-ended funds that you may have bought for your portfolio several years ago have since closed to new investments. The main reason for closing a fund is because its managers want to stop it getting bigger. If this happens to a fund you hold, you need to decide if the move is reassuring extra protection for your money or a worrying signal that the fund has collected too much 'hot money'.
"We may see an increasing number of fund closures due to the increasing trend among discretionary fund managers and independent financial advisers to use model portfolios," predicts Rob Pemberton, investment director at HFM Columbus. "These typically concentrate their investments to between 10 and 15 best-of-breed funds, so the top-performing funds of the last couple of years have attracted a huge slice of money."