There's a lot to be said for a fund that doesn't hesitate to close to new investors. By Russel Kinnel, Contributing Editor April 30, 2010 One of the few good things about the 2007-09 bear market was that a number of fine stock funds that had been closed to new investors reopened. As the asset bases of these funds shrank -- the result of falling share prices and shareholder withdrawals -- managers concluded that they could safely accept new cash without hurting their ability to run the funds efficiently. Despite the stock market's robust rebound over the past year, most of these reopened funds haven't been overwhelmed with new money. As a result, they're still open -- but that may not be the case for long.There's a lot to be said for a fund that doesn't hesitate to close to new investors so that its managers can preserve the strategy that built its great record. As a longtime shareholder in Vanguard Capital Opportunity (symbol VHCOX), which has been closed to new investors since 2004, I think I have benefited from Vanguard's decision to stop the flood of new cash before the fund's managers started to drown in it. Beat the rush. I've identified three standout funds that are open now but have closed in the past. Given the lack of cash infusion, they probably won't close soon. But because these funds boast strong long-term records, it wouldn't take much of a run-up to persuade investors to send them money. Rather than waiting for the rush, buy the funds now, enjoy excellent performance before they close, then relax after they shut. At Royce Special Equity (RYSEX), hot performance generally comes during down markets. Manager Charlie Dreifus's emphasis on firms with clean accounting and healthy balance sheets has helped make this small-company stock fund one of the best performers during bear markets. In 2008, for example, it lost 19.6%, compared with a drop of 33.8% in the small-company Russell 2000 index. Because of Special's performance history, money tends to flow into the fund near the end of bear markets. The swell usually subsides during rallies because the fund tends to lag in strong markets. Dreifus last closed his fund in 2004, when assets totaled about $900 million. Today, the figure is $1.3 billion. But for Dreifus, the decision on whether to close depends more on the availability of attractive stocks than on the fund's size. Advertisement I'd kick myself if I missed a chance to buy Vanguard International Explorer (VINEX). The fund, which invests in fast-growing small and midsize foreign companies, has a significant advantage over its rivals: It charges only 0.36% a year, 0.6 percentage point less than its next-cheapest no-load-fund competitor. A team from Schroder Investment Management, led by Matthew Dobbs, has produced strong long-term results with a patient approach, holding stocks about three years, on average. The fund's asset level, currently $2.0 billion, is a little higher than it was when it last closed, in 2004. The asset base tripled that year, suggesting that it was the rate of inflows more than the overall asset level that led to the close. A $25,000 initial minimum requirement is Vanguard's way of preventing a repeat of the onslaught. You don't want to be caught on the outside looking in at Sequoia Fund (SEQUX). The last time the fund closed to new investors, in 1982, it remained shut for a quarter of a century. Assets at the time of the first closure were about $248 million; today, they total $2.9 billion. One of Sequoia's founding managers, the late Bill Ruane, had close ties to Warren Buffett. The fund is now in the hands of a new generation of managers, including Bob Goldfarb, who joined the firm in 1971 and has been a manager of Sequoia since 1998. Like Royce Special, Sequoia tends to hold up well in down markets and lag during rallies. The managers find shelter in big, fast-growing companies, such as Idexx Labs, and continue to hold a huge position (20% of the port-folio) in Berkshire Hathaway. Columnist Russel Kinnel is director of mutual fund research for Morningstar and editor of its monthly FundInvestor newsletter.