You've done your research. You've found a mutual fund that both tickles your fancy and fits within your allocation plan. And, you've made sure that you will be able to cover the minimum initial investment -- next week. Unfortunately, after this quite protracted bull run we've recently had, you've also just noticed an all-too-common story: The fund is about to close.

Fund closures often leave existing shareholders a free pass to continue adding to their investment. Should you fall into this category, it's crucial that you assess whether it's prudent to continue sending new money after the doors close.

Meanwhile, if you're thinking of diving in before the fund closes, it's best to stop and look first. This might be your one last shot at getting in, but nothing says you necessarily need to take it. After all, mutual funds are not collector's items. They're investment vehicles, and funds with bloated asset bases can make for a bad ride.

The bad
As a fund's asset base grows, especially in the small-cap arena, the manager will have much more difficulty moving in and out of holdings without affecting their prices. In my own little world, there are two solutions: decrease the assets (limit them) or increase the fund's individual holdings. If you increase the holdings enough, you'll change the manager's strategy, essentially creating an index hugger. No need to pay up for one of those, of course. Indeed, if you're looking for an index fund, there are several dirt cheap options out there -- Vanguard's top-notch Total Stock Market Index (FUND:VTSMX) definitely included. With Total Stock Market, you're able to get coverage of the whole market, including stalwarts like General Electric (NYSE:GE), Microsoft (NASDAQ:MSFT), and ExxonMobil (NYSE:XOM). Furthermore, that passively managed puppy sports an expense ratio of just 0.18%.

The ugly
Even large-cap funds can have a problem when it comes to asset bloat. With an asset base of more than $50 billion, Fidelity's old behemoth Magellan (FUND:FMAGX) has more assets than the GDP of several small countries. As a matter of fact, it has enough assets to be the 75th richest country in the world. Although this fund's recently retired manager ought to be a king, given all the wealth he controlled, it's no wonder he had such a difficult time maneuvering this one-time great.

And ... the good
The good news, you say? Well, with mutual funds, there is usually no need to make a hasty decision. After all, good funds tend to close for good reasons. Bear with me here. I've already mentioned that a growing asset base can be bad for a fund. However, at the same time, that growing asset base generally means additional revenues for the fund manager. Shareholder-friendly shops -- i.e., the ones that actually care about their investors -- are willing to give up that additional income in order to focus on serving the interests of their current shareholders. When a fund company is willing to take those steps to protect me, it says boatloads about their integrity. Heck, it almost makes me believe that past performance isn't necessarily the most important factor in choosing a mutual fund.

As a matter of fact, in an unsurprising move, the shareholder-friendly Royce shop recently closed the doors to one of its premier (pun absolutely intended) funds, Royce Premier (RYPRX). This small-cap offering, whose largest holdings include Thor Industries (NYSE:THO) and Lincoln Electric Holdings (NASDAQ:LECO), has recently experienced what fund geeks like me call "asset drift." Because of its excellent performance and low turnover, it has crept up a little more into the mid-cap range -- not necessarily a bad thing, but something to keep in mind when looking for a small-cap fund.

Another interesting recent closure in small-cap land includes the Vanguard Explorer Fund (VEXPX). This unusual fund, whose assets have climbed to more than $12 billion, includes some familiar names, including Western Digital, Red Hat, and PDL BioPharma. Explorer has also found itself further up the cap range lately. However, show me an actively managed small-cap fund with an asset base of more than $12 billion that has remained open -- without creeping up into the mid-cap range -- and I'll owe you an ice cream cone!

The Foolish bottom line
As it turns out, Royce Premier and Vanguard Explorer were Champion Funds, selected by the Fool's lead fund guru, Shannon Zimmerman. So where do I turn to find some worthy new candidates? Champion Funds, of course.

Shannon has recently recommended a new small-cap pick that investors could use to replace both these Champs. Sound like an interesting proposition? Click here for a free test drive of Champion Funds, which carries a full 30-day no-risk guarantee. Not only will you have access to this small-cap replacement, but you'll also have access to all the previous picks, as well as our fantastic discussion boards. If you don't like it, there's no obligation to stay -- although we certainly hope you will!

Fool contributor Ryan Angell owns shares of Royce Premier and Vanguard Explorer. Microsoft is an Inside Value recommendation. PDL BioPharma is a Rule Breakers recommendation. The Motley Fool's disclosure policy is open 24/7.