Open ended fund
- An open ended fund is the type of mutual fund in which an investor can enter and exit whenever he wants.
- In an open-ended fund, the capital invested is endless and there is no tenure for its redemption, so it is perpetual by nature.
- An open ended fund is available anytime to anyone for subscription and repurchase. It means it has no time limit for buying and selling.
- An Open ended fund can be bought from the initial public offer or from a secondary market like stock exchanges.
- An open ended fund deals with the net asset value which is calculated at a regular interval like annually.
Closed-ended fund
- As the name suggests, a closed-ended fund has a fixed tenure, once the time limit over it will automatically redeem after that particular time
- An investor can invest in it during the initial public offer only. It cannot buy from the stock exchanges.
- In closed-ended, the fund invested by an investor for a short period because a closed-ended fund has short life span.
- A value of a closed ended fund is defined by the demand and supply.
- At the time of redemption of a closed ended fund, the total amount realized is distributed among the investors as per their investment
Open-Ended Fund v/s Closed Ended Fund
Basis
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Open ended fund
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Closed ended fund
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Meaning
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An open ended fund is the type of mutual fund in which an investor can enter and exit whenever he wants. It is a plan which continuous infinite.
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As the name suggests, a closed-ended fund has a fixed tenure which is for a short duration.
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Nature
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By nature, an open ended fund is perpetual.
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Closed ended fund is finite in nature.
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The Redemption period
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Open ended fund has no fixed redemption period.
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A Closed ended fund has fixed redemption period.
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Value
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A value of an open ended fund is determined by the net asset value.
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In the closed ended fund, a value is defined by the demand and supply force.
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Trading
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In open ended fund, an investor can buy and sell it from the initial public offer and from stock exchange also.
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In the closed ended fund, an investor can invest or subscribe for the period of the initial offer, once the initial public offer is over no possibility to invest in it.
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Listing on the stock exchange
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Open ended fund is not listed on the stock exchange.
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A Closed ended fund is listed on the stock exchange.
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Transaction time
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Open ended fund is executed on daily basis.
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The closed ended fund is executed on real time basis.
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