Open Ended Mutual Fund
An open-ended Mutual Fund scheme is one that does not have a fixed maturity period. Here the units can be traded at its Net Asset Value, at any time. That is, the investor can enter or exit the fund as per their convenience. Here the investors buy units directly from the fund itself, rather than from an existing shareholder. It also supports buying units from fund holders, wishing to sell their units of the fund.
This mutual fund scheme continues to offer new units for sale to its customers. Also, they do not specify any conditions or duration for redemption. If demand for units goes high, then the open-ended fund will continually sell its funds without taking into account the count of the investors.
The number of outstanding units of the funds increases or decreases every time when the company sells or buys its existing units. Thus the existing unit cost of the open-ended fund keeps varying.
Benefits of open-ended schemes
- All or part of the fund can be redeemed at any time we wish, thus having high liquidity.
- The investor can opt for Systematic Investment plan that allows them to invest small sums of money each month, for over a long period of time.
- In addition to offering multiple schemes, it also allows investors to switch easily between various schemes.
- Their Net Asset value is open to the investor, making it highly transparent.
Recommended Read :
- Methods to Select the Best Mutual Funds
- What are Mutual Funds?
- Types of Mutual Funds in India
- 5 Types of Popular Mutual Funds in India
- Understanding Mutual Funds Returns?
- Fixed Deposit Vs Mutual Fund
- Real Estate Vs Mutual Fund
- SIP Vs Mutual Fund
- Mutual Fund Investment Strategy
- Mutual Funds in India
- What is Net Asset Value (NAV)?
- Open Ended Mutual Fund Scheme
- Close Ended Mutual Fund Scheme