Why are mutual funds closed to investors?

Fund families typically claim that closing a fund protects the fund's superior performance by preventing it from growing too large to be managed efficiently. Even though funds with better performance and larger size are more likely to be closed, there is no evidence that closing a fund can indeed protect its performance. Instead, fund closing decisions are more likely to be motivated by spillover effects - by closing a star fund, the fund family signals its superior performance and also brings investors' attention and investments to other funds in the family..