2007-01-10 02:40:22 · 10 answers · asked by manish1327 1 in Business & Finance ➔ Investing
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2007-01-11 22:38:29 · answer #1 · answered by Anonymous · 3⤊ 0⤋
An open-end fund is a mutual fund that has no restrictions of how many shares can be issued. If there is high demand for the stock, the fund will continue to issue shares no matter how many investors there are. The fund will also buy shares back from investors when they want to sell. Open-ended funds are priced by their NAV or Net Asset Value.
A closed-end mutual fund is an investment company that issues a fixed number of shares. The shares can be traded on the market like normal stocks, but new shares are rarely issued after the fund is launched. The main difference between an open-end fund and a closed-end fund is that shares of closed end funds are priced by supply and demand, while open-end funds are priced by NAV.
2007-01-10 12:24:21 · answer #2 · answered by Michael 2 · 0⤊ 0⤋
Closed end fun is telling a joke about the boss and he hears it, while open ended fun is telling jokes about someone else's boss.
Say I started an investment company to buy only the 200 most-profitable companies on the S&P500. When incorporating, we issued 100 million shares, period. Until we do a split or an additional issue, there will only be 100 million shares. If you wanted to get into this company, you had to buy some of that 100 million share pool. This is a closed-end fund.
Say I started a mutual fund to invest in jumbo CDs. I set a minimum of $100k, which buys a jumbo, and increments of 100k. There are over 6,000 US banks that are FDIC insured, so I could essentially take almost any amount of money from customers. You have a $100k for a low-risk income-earning investment? We issue another share and find another bank. The end was open.
2007-01-10 11:10:41 · answer #3 · answered by Rabbit 7 · 0⤊ 0⤋
Since the question has been answered below, I will tell you that I love CEFs. These give you an opportunity to do DCA or SIP. They allow you to put Trailing Stops, Sell Stops and other types of orders. A lot of times these funds trade at a discount to NAV, and at other times (demand), they trade at a premium. If you pick the right funds (discounted) and then wait until it is in demand (premium), you can eek out an additional 5% to 10% on the returns. Not possible with Open Ended Funds.
The hard part is to do full research on CEFs. A bit challenging, but not impossible.
Stock Screeners will find you some great ideas that are performing with high growth and/or high income. I am into the high income category since I love the sound of dividends coming in every month or every quarter, even though I am a relatively young investor.
That is more than you asked, but I am sure you see value in the above!!!!!!
KKP_Investor
2007-01-10 12:54:49 · answer #4 · answered by KKP_Investor 3 · 0⤊ 0⤋
These are 2 types of funds of mutual funds. Closed ended funds are those funds which have a pre determined number of units, say a million units. Once the number of units are sold, the mutual fund will not issue any more units under the scheme. These units are then traded in the stock exchange. Depending on the demand and supply for the units, the rate keeps changing. This is same like the shares.
Open ended funds do not have a specific number of units. The mutual fund house issues units depending on the demand for the same.
2007-01-10 11:42:35 · answer #5 · answered by ravi 2 · 0⤊ 0⤋
Closed end funds are traded like stocks. You buy and sell them in the stock market. They may sell for more than net assets and the may sell for less than net assets. If they sell for less than net assets, they are a good buy sometimes. Also closed end funds have a set number of shares outstanding.
open ended funds are purchased directly from the fund company at net asset value plus any front end load that may apply. There are often restrictions on the minimum amount you have to invest in them. Sometimes the amount is very high. There is no limit to the number of shares of an open ended fund. If the fund becomes very large, it becomes very difficult to manage.
There are other differences also but those are the main differences.
2007-01-10 11:02:43 · answer #6 · answered by Anonymous · 0⤊ 0⤋
a closed end fund is a mutual fund where the investment company is no longer issueing shares of the mutual fund to the public. these trade on an exchange just like a stock and typically trade at a discount to thier nav. you would pay a commission to buy these just like a stock.
an open end mutual fund is one where shares are constantly being offered to the public. they will charge you a sales charge instead of a commission.
2007-01-10 11:10:39 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Open ended funds are traded in exchanges where as closed ended funds are not. Open ended funds are not loaded where as closed ended funds are. Open ended funds invest in stocks, bonds etc; where as closed ended funds can invest in Real Estate, metals, foreign currency etc;.
2007-01-10 11:56:52 · answer #8 · answered by Mathew C 5 · 0⤊ 0⤋
The question should be....
what is close ended and open ended mutual funds...(keeping in view that you asked in investing category)
2007-01-10 11:01:56 · answer #9 · answered by pathik 3 · 0⤊ 0⤋
close ended is closed in fixed time. but open ended did not closed and it continous
2007-01-11 22:27:31 · answer #10 · answered by keral 6 · 0⤊ 0⤋