Tried to invest in a good small-company stock fund lately? One by one, funds that specialize in small- and micro-cap stocks have been slamming the door on new investors. In the past year, more than 27 have dosed, including leading performers such as the Fidelity Low-Priced Stock and Royce Opportunity funds. You can hardly fault the managers. Last year was super for small-company stocks, with the Russell 2000 small-cap index gaining 47% and the Wilshire Micro-Cap Index rising 92%. (Small-cap companies have assets below $2 billion; micro caps often go no higher than $400 million.) The gains, coupled with massive inflows from investors, make it harder to find enough stocks at attractive prices to nil their bulging portfolios. Rather than lowering standards or reaching up to the mid-cap universe-either of which can hurt returns for current shareholders-many managers slow the flow by turning away new investors.
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