An Open-End Mutual Fund
An open-ended mutual fund is a collective investment scheme that issues and redeems shares based on
the net asset value (NAV) of the fund. These funds continuously offer new shares to investors and buy
back existing shares on demand. Investors can typically buy or sell shares of an open-ended mutual fund
at any time at the current NAV. The fund manager is responsible for actively managing the portfolio,
making investment decisions, and adjusting the asset allocation based on the funds investment
objectives. Open-ended funds offer investors liquidity and flexibility, as they can enter or exit the fund attheir discretion. This liquidity feature makes open-ended mutual funds a popular choice for retail
investors who want access to a diversified portfolio and professional management.
A Close-End Mutual Fund
On the other hand, a closed-ended mutual fund has a fixed number of shares that are traded on stock
exchanges. Once the fund is launched, the number of shares remains constant and is not influenced by
investor demand. Unlike open-ended funds, closed-ended funds do not continuously issue or redeem
shares. Instead, investors can buy or sell shares of the closed-ended fund on the secondary market
through stock exchanges, similar to buying or selling stocks. The price of the shares is determined by
supply and demand dynamics and may trade at a premium or discount to the funds net asset value.
Closed-ended funds typically have a specific termination date or can be terminated through a
shareholder vote. These funds often invest in specialized assets or strategies, such as infrastructure, realestate, or private equity. Closed-ended funds can offer investors the potential for higher returns but
may have limited liquidity due to the nature of trading on the secondary market.
An Interval Mutual Fund
Interval mutual funds are a unique type of investment vehicle that combines features of both traditional
open-end mutual funds and closed-end funds. These funds are designed to provide investors with access
to illiquid or less liquid assets that may not be readily available in traditional mutual funds. Unlike
traditional open-end funds, which allow investors to buy and sell shares at any time at the net asset
value (NAV), interval funds have specific intervals or periods during which investors can buy or sell
shares. Typically, these intervals occur quarterly, semi-annually, or annually. The limited redemption
periods help fund managers effectively manage the underlying illiquid investments by ensuring that they
have sufficient time to buy or sell assets without disrupting the funds overall portfolio. Interval mutual
funds offer investors the opportunity to diversify their portfolios and potentially generate attractive
returns from less liquid assets, such as private equity, real estate, or debt instruments. However, its
important to note that due to their illiquid nature, interval funds may carry higher risks and require a
longer investment horizon. Investors should carefully consider their investment goals, risk tolerance,
and liquidity needs before investing in interval mutual funds.