Course 503: Where and Why Asset Size Matters
How Funds Can Manage Asset Growth
In this course
1 Introduction
2 Asset Size and Market Cap
3 Asset Size and Turnover
4 How Funds Can Manage Asset Growth
5 How You Can Handle Asset Growth

There are a few things funds can do to manage asset growth. First, they can close. Closed funds don't accept money from new investors, but they'll usually continue to take investments from current shareholders. Their asset bases may grow, but at a more moderate pace than when they were open. Some funds close to current investors, too, which means that even those who own the fund already can't contribute any more to it. But that's pretty rare.

More often than not, fund managers cope with huge asset bases by altering their strategies. Some will buy more stocks. Heartland Value (HRTVX), for example, held about 50 stocks when it had just a few hundred million dollars in assets; when assets topped $2 billion in 1997, the fund owned more than 300 names. (As assets dropped back down, the fund's portfolio has gotten more trim, but it still holds more than 140 names.) Other funds will start buying larger stocks, as American Century Ultra (TWCUX) did. Still others will hold cash, because they just can't find enough stocks to buy.

Next: How You Can Handle Asset Growth >>


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