A controversial decision in a Maryland court backing some closed-end mutual fund managers’ tactics aimed at thwarting shareholder takeovers has raised doubts about the future of closed-end funds, InvestmentNews reports.

Neuberger Berman triumphed in court last month when a judge supported its decision to use a "poison pill" defense against investors targeting one of the company’s closed-end real estate funds.

But some investment experts have characterized Neuberger’s success as a pyrrhic victory for closed-end funds, which are increasingly viewed as investments with impenetrable management. Further empowering funds to resist shareholder takeover attempts fuels concerns that trustees are less responsive to investors’ needs, the experts said.

Other industry officials applaud the decision because investment raiders who seize control of a fund for their own benefit are a real and growing concern.

Closed-end funds in recent years benefited substantially from low interest rates and have seen a resurgence in popularity. By the end of the third quarter, assets in 638 closed-end funds surged to $179 billion, an increase from $179 billion in 618 closed-end funds at the end of the third-quarter last year.

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