NEW YORK (MONEY) - A billion here and a billion there, and before long you've got way too much money to manage. That's apparently why Fidelity announced Friday that it was closing its mammoth Contrafund to new investors, effective April 28.

The big question, however, is whether the damage is already done.

Many fund analysts say yes -- they've been worrying about Fidelity's top performer, now with $64 billion in assets, for years.

"Fidelity has historically been slow to close its funds," says Russel Kinnel, director of fund research at Morningstar. "But waiting until the assets have already ballooned is likely to hamper performance -- just look what happened with Fidelity Magellan." That once-impressive fund, which surpassed $100 billion in assets at its peak, went into a prolonged slump.

"We don't hesitate to close funds when we need to," said Fidelity spokesman Vincent Loporchio.

And for now, Contrafund FCNTX (Research) continues to defy its critics. During the 12 months ending March 30, the fund soared 22 percent, according to Morningstar, which is 10 percentage points ahead of the S&P 500. And over the past five years, the fund has delivered an annualized return of 10.3 percent, which places it in the top 2 percent of large-growth funds.

To achieve these returns, manager Will Danoff has followed a go-anywhere stock-picking approach. Recently his portfolio held nearly 500 stocks, including large stakes in Google, Canadian oil and gas producer EnCana, and Genentech.

There are clear indications, however, that Danoff is starting to struggle. For one thing, Contrafund's cash level has risen to 10 percent, far higher than the average 2 percent for Fidelity stock funds.

Says Jim Lowell, editor of Fidelity Investor newsletter, "It shows that Danoff has more cash coming in than he has opportunities."

But the most telling sign is that Danoff is producing better returns at his other charge, a smaller, broker-sold version of Contrafund, called Fidelity Advisor New Insights FNIAX (Research), which is also being closed. With only $6 billion in assets, New Insights is up 25.5 percent over the past 12 months.

That's not too surprising since New Insights can hold larger stakes in racier but less liquid small and mid-cap stocks. By contrast, in Contrafund, Danoff has been forced to move up the market-cap scale and buy mainly blue-chip stocks.

The fund's closing may help give Danoff some breathing room -- but probably not enough.

After all, millions of existing shareholders can continue to contribute money.

And the one month window before the April 28th deadline may spur a last-minute flood of money. When Fidelity Low-Priced Stock, another behemoth fund, had a similar "soft" close in 2004, it continued to receive billions in cash inflows. As a result, Fidelity had to close the fund to new 401(k) investors and large adviser accounts a few months later.

Still, if you are a Contrafund investor, there's no reason to panic and sell. "Danoff is one of the best stock-pickers around," says Kinnel, "and the fund is still likely to be an above-average performer."

But you do need to lower your expectations -- it will be difficult for Danoff to match his earlier blow-the lights-out performance. For those who are shopping for a large growth fund, however, you are probably better off looking elsewhere. After all, there are other excellent funds available that aren't weighed down by $64 billion in assets. (See MONEY's top fund picks.)

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