4 Replies to “In open ended mutual fund to buy the the units sold by any holder where from company gets money?”

  1. it from the back end profits given to the spread between inception interest rates and the quadrangle of the leveraged output of the fund.

  2. The fund doesn’t repurchase the shares. Brokerages and market makers scoop up shares and accumulate them for future selling opportunities. Once sold, a share remains in the public sector to be sold and resold, bought and repurchased as the supply/demand system will allow.

    The difference between open end and closed end funds: The open ended fund can print fresh shares whereas the closed end version cannot add shares.


  3. The fund generally has some cash reserves which it utilizes to pay for the redemption. Also an open ended schemes generally have a a cash inflow. This inflow is also utilised to pay for the redemption. At times when the outflow is greater than the cash reserves + inflow, at that time the scheme has to sell some of its assets to pay for the redemption.

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