Owners of small-cap funds have learned over time that their fortunes sometimes bob on stormy seas, but investors still willing to take the ride may find that the best outfitted ships have already sailed.

Regardless of whether the strong returns posted by actively managed small-cap mutual funds are going to continue, funds that invest exclusively in companies with market capitalizations of less than $500 million are starting to see limits to their upside.

Because smaller companies have fewer shares in circulation, small-cap funds are limited in the amount of stock they can own. Such funds generally thrive because they are nimble and can move in and out of a manager's best picks. Very few small-cap funds grow beyond $1 billion or more, and often close to new money if they get too big.

Ron Pearson, a financial planner in Virginia Beach, Va., says that makes selecting the best funds more difficult. "I like small-cap and micro-cap funds," he says. "Unfortunately, they keep slamming the door closed on me. Unlike other asset categories where I can pick funds I like and stay with them, I have to keep looking for new places to put money for my clients."

Since May of last year, 26 small- or micro-cap mutual funds have closed their coffers to new investors, and six funds in the Wasatch family have stopped accepting any new money. Mutual fund tracker Lipper says there are still some 496 small-cap core funds, 457 small-cap growth funds and 205 small-cap value funds that remain open to investors. One of the top-performing small-cap growth funds, the Wasatch Small Cap Growth Fund (WAAEX), closed to all new money in September, and that leads some planners and analysts to say that even if the rally goes on, the opportunities may have rolled past.

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