FWIW:
Over the past several months I have seen an increasing number of posts from other MFO-ers with regard to formerly closed mutual funds reopening to new investors. This is deja vu and is something I remember seeing as the year 2008 evolved. File this one in the back of your cranium and see if this trend continues or accelerates as 2016 progresses. If so, think seriously about raising your cash levels or rejiggering your portfolios to decrease the number of risky (high beta) holdings in your portfolios.
Comments
Concern with your observation and thoughts about the "reopenings".
Take care,
Catch
My concern and thought in this regard is straightforward. I believe this is a stealth indicator of negative investor sentiment, i.e., investors are pulling their money out of mutual funds and reducing their exposure to the market, in both equities and bonds. These funds now have room to accommodate new investor funds and are actively "recruiting" a new inflow of funds. I have always placed little faith in the AAII, Michigan, etc., sentiment polls and mutual fund re-openings are an example of what investors are actually doing, not what they are saying to a pollster.
When markets are down significantly, more funds will understandably start opening for one or more of the following reasons:
1. Taking a 10% or more paycut in fees just from fallen asset values hurts them to tears
2. They want to build a cash position for the turn around so they can try to juice their returns relative to their peers and/or they are seeing more buying opportunities than they have cash for
3. They want to avoid selling for the inevitable redemptions from investors that get scared and run usually to their own detriment.
4. The pressures of investors rushing in that made them close especially in smaller niches is not there anymore or the lower market valuations make them more comfortable to deploy more cash than before when they closed.
Trying to read tea leaves in this behavior to infer one way or the other seems, to say the least, futile.
I interpreted Price's closing of PRHYX about five years ago as a warning sign and sold. Big mistake, as it continued to do well for 2-3 more years. That one is still closed.
I suspect another T. Rowe fund PRWCX will never reopen. The fund is huge and immensely successful. Maybe a clone some day? Right now I'm down to a foot-in-the-door holding with that one.