Fidelity to Close 3 Popular Funds to New Investors

Fidelity Investments said Thursday it plans to close three of its most popular stock mutual funds to new investors in an effort to further boost performance.

The $40.9-billion Fidelity Growth & Income Fund, the $32.2-billion Fidelity Contrafund and the $11.6-billion Fidelity Low-Priced Stock Fund will close on April 3, the company said. Each of the funds has doubled in size since the end of 1995.

The closing of the three funds comes six months after the biggest U.S. fund company closed its biggest fund, the Magellan Fund, to new investors.

“Fidelity is taking more steps to keep asset growth from getting out of control and also to make sure their managers aren’t overwhelmed,” said Russel Kinnel, a senior analyst at Morningstar Inc. “It’s the right decision because these funds were already getting too big to really be outstanding performers.”

Robert Pozen, who runs Fidelity’s mutual funds group, said the company uses no specific formula when deciding to close funds.

Investors who already own shares will be able to buy more after April 3, as will participants in most group retirement plans, in which the fund is an existing investment option.

Fidelity also said it is opening a new fund, Contrafund II, that will invest in shares of medium-size companies, which are the same types of stocks Contrafund buys.

The shutting of the Growth & Income Fund was initiated to ensure that assets “grow at more reasonable levels,” Pozen said.

Fidelity has other funds that could be bought in place of the Growth & Income Fund to fill a similar objective, namely the Fidelity Fund and the Fidelity Equity-Income and Equity-Income II funds, Pozen said.