Fidelity Investments will close its $63.8 billion Contrafund, currently its largest, to new investments as of April 28, Bloomberg reports. The fund has delivered an average annual return of 10% over the past five years, handily beating the S&P 500, which has averaged not quite 4% a year in that timeframe.

It is precisely these outsized returns that have attracted investors' attention; in the past 14 months through February, the fund has taken in $10 billion in net new flows.

Fidelity says the main reason Contrafund manager Will Danoff wants to close the fund is to protect his ability to deliver strong returns. Likewise, a second fund Danoff manages, the Advisor New Insights Fund, which has $5.5 billion in assets and has returned an average of 24% a year since its 2003 opening, will also close.

Closing these two funds, said Phillip Bullen, Fidelity's chief investment officer for large-cap core, is "in the best interest of shareholders [because] stabilizing cash flows" will help Danoff continue to deliver strong returns.

The recent surge of new cash, for instance, has forced the portfolio manager to move more than 10% of each of the funds into cash, and this has put a drag on performance. Indeed, "closing a fund is something we regularly look at when cash flows strengthen," added Fidelity spokesman Vin Loporchio. Currently, 10 of Fidelity's 381 funds are now closed.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.