Mutual Funds can be segregated as per their underlying asset, style of investing, or structurally. Looking at mutual funds from a structural point of view, they are classified as open-ended mutual funds and closed-ended mutual funds.
Open-ended mutual funds are mutual funds where the units can be issued and redeemed at any time. Open-ended mutual funds do not have any defined lock-in period, except ELSS funds. They do not have a defined maturity period. Open-ended mutual funds have no limits on the number of mutual fund units that can be issued. Open-ended mutual funds may be listed on the stock exchange. Mutual fund units are purchased and redeemed on demand at the NAV (net asset value) which fluctuates every day.
Open-ended mutual funds may have an exit load depending on which category they belong to. Open-ended mutual funds are more popular than closed-ended mutual funds among retail investors. Open-ended mutual funds are available for subscription, repurchase or redemption on a continuous basis. Open-ended mutual funds, for example, could be a hybrid fund, which invests in both equity stocks and bonds.
How does open-ended mutual fund work?
An open-ended mutual fund is launched in the market by announcing a New Fund Offer (NFO). As per SEBI regulations, an NFO is open for a maximum period of 15 days. The units are offered at predefined offer price in NFO. An investor can purchase or redeem units of an open-ended mutual fund at any time after the closure of NFO based on their NAV (Net Asset Value)
If an investor is looking for redeemed and to diversify their investment portfolios, these funds could be an option. An investor can browse through an open-ended mutual fund list to evaluate the performance track record across different market cycles. This helps investors make a well-researched decision.
Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.