Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds.
What would you tell Greg about open-end funds?
A.
The number of units is not fixed, and varies with investor demand and redemption orders.
B.
Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.
C.
Units are bought and sold amongst the unitholders.
D.
Initial shares in the mutual fund are allotted through an initial public offering (IPO)
According to the Closed-End Funds vs. Open-End Funds: What’s the Difference? - Investopedia, open-end funds are mutual funds that can issue an unlimited number of shares to investors. The number of units is not fixed, and varies with investor demand and redemption orders. Investors buy and sell open-end funds directly from the fund company at the net asset value (NAV) of the fund, which is calculated at the end of each trading day. Open-end funds are not traded on an exchange or in the secondary market.
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