6 Replies to “what is the difference between the open ended and closed ended mutual funds?”

  1. an open ended fund has the ability to purchase more positions or exit or sell positions in the fund as they wish to as long as it adheres to the guidelines of the fund. A closed end fund usually trades throughout the day like a stock, however the positions within the closed end fund are fixed..You get what you got, and that’s it. No flexibility in adding or deleting dogs or winners, so active management of the fund is less intense

  2. Open-ended schemes

    Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV-related prices from and to the mutual fund on any business day. These schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on the amount you can buy from the fund and the unit capital can keep growing. These funds are not generally listed on any exchange.

    Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem units any time during the life of a scheme. Hence, unit capital of open-ended funds can fluctuate on a daily basis. The advantages of open-ended funds over close-ended are as follows:

    Any time exit option, The issuing company directly takes the responsibility of providing an entry and an exit. This provides ready liquidity to the investors and avoids reliance on transfer deeds, signature verifications and bad deliveries. Any time entry option, An open-ended fund allows one to enter the fund at any time and even to invest at regular intervals.

    Close ended schemes

    Close-ended schemes have fixed maturity periods. Investors can buy into these funds during the period when these funds are open in the initial issue. After that such schemes can not issue new units except in case of bonus or rights issue. However, after the initial issue, you can buy or sell units of the scheme on the stock exchanges where they are listed. The market price of the units could vary from the NAV of the scheme due to demand and supply factors, investors’ expectations and other market factors

  3. closed end…….limited number of shares………………..open…number of shares change as people buy and sell shares…………………

  4. open ended M.F = There is no particular period for buying & selling M,F. ( no time limit)

    Close ended M.F = Here is a limited period of transactions of buying & selling M.F (time limit)

  5. Open ended mutual funds, allows you to purchase more units during the term of the investment.

    Closed ended mutual funds has fixed amt of units circulating, to purchase them usually is like purchasing stocks on the stock exchange.

    Hope the information helps!

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