FUND manager Capital House is to close down six funds, five of them newly acquired, and merge 14 others. The move marks the demise of the ill-fated family of funds previously managed by Standard Chartered subsidiary Scimitar. The Scimitar funds to be closed are Gold, Worldwide Income, Worldwide Warrant, Worldwide Managed Equity and Swiss Franc Money Fund. The reason given for the closure is that the fund sizes are too small to make them cost-effective. Capital House will also close its own gold fund. Despite the recent rally, the company is not optimistic on the prospects for gold. Letters were sent to unitholders in the currency funds last week, advising them of the proposed closures and mergers. Other unitholders will be notified by the middle of this month. However, Capital House managing director Mr Andrew Lo said the mergers had not been finalised and would, in any case, require unitholder approval. Capital House says the funds to be merged are ones whose objectives and underlying structure are similar. Among those likely to be merged are the two companies' Japanese funds, the Pacific Basin funds, the sterling bond funds, the US dollar bond funds, the North American and American funds, the UK funds, the Continental European and European funds, and the two groups' US dollar, Japanese yen, deutschmark, sterling and European currency unit (ECU) funds. Scimitar's Worldwide Equity Fund will merge with Capital House's International Portfolio and Scimitar's Worldwide Bond with Capital House's International Bond. According to Mr Lo, the merged funds should remain fundamentally intact, while benefitting from lower costs. Any costs from mergers are usually borne by the fund house, not the investor. ''Just the name will change,'' he said. The funds most likely to merge already have the same fund manager. Those fund managers unhappy with the new management of Capital House left when the sale went through. ''You'd be surprised at the similarity,'' said Mr Lo of the proposed merging funds. Marketing manager Ms Connie Fung said: ''If the proposed mergers occur, unitholders will benefit from the funds being more cost-effective. At present, because of the small size of most of the funds, dealing and operating costs are high and this drags back the performance of the funds. ''The mergers will take advantage of Capital House's strength in Europe and Scimitar's strength in Asia.'' Scimitar's worldwide selection of funds had problems from inception in 1986. The first 10 sub-funds were under subscribed and minimum investment levels had to be slashed. In 1989, eight more open-ended, guaranteed mutual funds were launched. But again, Scimitar found itself running up against unforeseen hurdles as initial subscriptions only trickled in and six of the eight guaranteed equity funds were merged into one. By September of 1991, Scimitar Asset Management had been renamed Equitor Asset Management and, in November last year, the package of 27 funds under Equitor was sold to Capital House.