Occasionally, the management team and the Board of Directors of a T. Rowe Price mutual fund decide it is in the best interest of current shareholders to close a fund to new investors. Two primary factors may spur this decision:

  • Strong recent performance or the popularity of the asset class can lead to large amounts of new cash being invested in the fund. The managers may be unable to deploy these cash flows effectively by finding attractive new investments. As a result, a large cash position in the fund can weigh on returns of both newcomers and existing shareholders.
  • Mutual funds may become unable to perform their mission if they grow too large—this is particularly true of funds targeting smaller-capitalization stocks or a limited investment universe. Large funds might be prevented from buying additional shares in a company given ownership constraints. Managers also may find it difficult to buy or sell significant amounts of a stock given limits on how many shares are usually traded.

With these considerations in mind, on December 31, 2013, at 4p.m. ET, the Small-Cap Stock Fund and the New Horizons Fund were closed to new investors. However, existing shareholders in these mutual funds may continue to buy, exchange, and sell shares in accordance with our existing fund policies.

For investors who specifically want exposure to domestic mid and small markets, consider the T. Rowe Price Extended Equity Market Index Fund (PEXMX). This fund seeks to track the performance of a benchmark index that measures the investment return of small-and mid-capitalization U.S. stocks.

For investors who prefer broad market exposure that includes small market stocks, consider the T. Rowe Price Spectrum Growth Fund (PRSGX). This fund offers a professionally managed allocation of assets among a broad range of underlying funds that invest in domestic and foreign stocks, small- and large-cap stocks, and growth and value stocks.

All funds are subject to market risk including possible loss of principal.

Frequently Asked Questions:
What is the impact on mutual fund performance when a fund closes?

A closing should have no direct impact on performance. Indeed, we close funds precisely to avoid the potential for large cash flows to begin to adversely affect performance for existing shareholders. At this time, we feel there has been no adverse impact on our ability to invest in specific securities; we are acting preemptively. In terms of historical experience, the performance of funds that grow larger and eventually close varies depending on different factors. T. Rowe Price is firmly committed to the interests of existing shareholders as opposed to the gathering of assets for its own sake.

Since existing shareholders still can add to their accounts, why won't those cash inflows cause problems?

Controlled growth in assets over time can be managed effectively, and we have been relatively successful to date in doing so. With our extensive in-house research capabilities, we envision no difficulty finding attractive investment opportunities within our investment universe for moderated cash inflows at this time.

When will a fund reopen?

The time is indefinite—there is no predetermined target date to reopen these funds. Closed T. Rowe Price funds will reopen when we believe that all incoming cash can be effectively invested without altering a fund's investment program.

Will any other funds be closed in the near future?

At this time, we do not foresee the need to close any other funds.