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Compare and contrast an open-end (mutual fund) investment fund with a closed-end investment company.

Compare and contrast an open-end (mutual fund) investment fund with a closed-end investment company.

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Answer #1

In case of closed ended fund the investment company issues mutual fund by way of IPO in which the number of funds offered is fixed. However in case of open ended fund the mutual funds are offered to investors through fund company. There is no limit on the number of funds traded in open ended fund.

In case of open ended fund investors can purchase and sell at any time however in case of close ended fund there is timeline upto which the funds needs to be held.

In case of open ended fund the net asset value (NAV) is calculated as total net assets available divided by number of funds available. The NAV for close ended fund is determined based on demand and supply that is market trading of funds.

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