Cracking open a closed fund; these are ways to break into hot mutual funds closed to new investors.

It figures. Just as soon as you listen to rave reviews about some mutual fund coming through with unprecedented gains, you hear: "It's closed to new investors." The phrase is a blow to your pride and pocketbook. In the last 18 months alone, more than a half dozen funds have closed, including John Hancock Special Equities Fund (B), Janus Venture and Acorn International.

Can a fund really shut its door forever? Say it ain't so, Joe. Well, maybe not. There are a few ways you can sneak into a closed fund.

Family ties often make for an exception to the rule. A little-known fact: If you arc the spouse, sibling, parent or even grandparent of an existing shareholder, in some cases you may be allowed to invest in that fund, says Don Phillips, publisher of Chicago-based Morningstar Mutual Funds.

A prime example is Janus Twenty: It lets in family members. It was closed to new investors last january. Long considered an all-around star, janus Twenty is still one of the best funds out there, with an average five-year return of 22.05%.

Similarly, CGM Capital Development permits transfers to relatives. This stellar growth fund, which is ranked number one in its category (see "Mutual Funds: Still Going Strong," April 1994), was up 28.66% last year.

Investment adviser Vernon Brown, president of V. Brown & Co. Inc., White Plains, N.Y., offers yet another fail-proof way to break into a closed fund. A friend who is an existing shareholder could transfer shares to you. A fund can't stop a shareholder from transferring ownership, unless a fund's registration statement specifically prohibits such action.

Yes, there is some paperwork involved in getting the new account established. But once in, you are in for good. Most funds don't limit additional purchases.

What if the fund you are interested in has a sister fund? Chances are you will be able to switch shares from one fund to the other. Up until its recent closing, if you were to buy Acorn International, you could have transferred shares into the Acorn Fund, the darling of small company mutual funds, up 32.32% last year.

Acorn International began 1993 with $29 million in assets and ended with $901 million. On january 14, 1994, it reached $1.5 billion in assets. By Valentine's Day, the fund was closed.

Mutual funds close to new investors for several reasons. Most often a fund is closed because either a manager believes the fund has grown too large or the market has bid up the share price of the types of securities in the fund, according to John W. Rogers, president of Chicago-based Ariel Capital Management Inc.

In 1986, Rogers opened the first fund to be managed by an African-American owned company, the Calvert-Ariel Growth Fund.

Four years later it was closed (at about $200 million in assets). To satiate hungry disciples, Rogers launched the Calvert-Ariel Appreciation Fund.

As a sort of a "move of last resort," write a letter explaining why you want to get into the fund. The idea to get across is that you want the fund so bad, you are likely to be a customer for life.

What if none of the above works or even fits your situation? Well, you just may have to face the music and pay heed to a serenade from another fund suitor with the same investment objective.

TOP TIP

There are some sure-five ways to waste money. A common costly financial boo boo: Putting tax-deferred or tax-free investments in an individual retirement account(IRA). Too Many folk instance, have annuities or municipal bonds in their IRA. Well, these are stand-alone products, so w IRA fees? A better bet: Put some stock in your IRA.