Investing April 10, 2001

Funds Fold At Record Pace in 2000

April 10, 2001 (PLANSPONSOR.com) - A record 225 mutual funds liquidated last year, and 40 have already folded in 2001, according to a study by Wiesenberger Thomson Financial.
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The pace of closure hasn’t slackened in 2001. Since the beginning of the year, 40 funds have liquidated, versus 35 a year ago. During that time three of the 39 Internet funds in existence have folded.

Too Young, Too Small

The study reported that international stock funds topped the list of last year’s closures, accounting for 19% of the total. US large-cap funds ranked second, with the 35 folded funds constituting 16% of the total, according to CBS MarketWatch.

The average large cap fund closed last year was just 11 months old.

The average fund liquidated last year had $21.1 million in assets, below the $25 million Wiesenberger estimates is required to operate at a profit. Fund closures typically occur because a fund’s assets aren’t large enough to operate profitably.

Within the 43 international fund closures last year, Latin America and Emerging Market funds were the most common liquidations, with 11 in each category.

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