Manage a Clone Fund

Have you ever come across a top-performing mutual fund you'd like to invest in, only to find out that it's closed to new investors? You may feel as if you've missed out on a golden opportunity, but you may be in luck. Clone funds, which have been popular in Canada for the last several decades, are showing up more often in American markets.

Understand Your Clone Fund

Find out what a clone fund does. Like its name implies, a clone fund is designed to replicate the performance or strategy of another mutual fund in the hopes that the same measure of success will be achieved.

Learn why clone funds are created. Clone funds are usually designed after mutual funds that are already closed to new investors.

Buy Into a Clone Fund

Look around for several closed funds that interest you. Although you won't be able to invest in these funds, this will give you a good idea as to where you want to invest your money.

Once you've selected a few closed mutual funds, check to see if there are any clone funds. You'll be able to spot clone funds by their Roman numeral "II" designation.

Contact your financial adviser for assistance if you're having trouble finding potential funds. Your financial adviser can work with you to locate alternative clone funds that will meet your financial goals.

Determine the financial objectives of a given clone fund by requesting a copy of the funds prospectus. To save time, you can also try to see if there is any information available on the fund Web site.

Read how the board of directors plans to manage the fund. Since a clone fund is supposed to closely mirror an existing fund, it's a good bet that it will be managed similarly. Still, it's better to find out for sure before investing your money.

Buy shares in the fund through a broker, fund supermarket or the fund itself. After you've purchased your shares, your financial adviser can work with you to develop a system to better manage your new portfolio.