What is the difference between an Open-ended and Close-ended mutual fund scheme?
Mutual funds in India are differentiated based on their investment structure and the flexibility and ease with which they can be bought and sold.
|Investment||Units of close-ended funds can only be bought during a specific period, and sold at maturity. They are also traded on the stock exchanges to enable exiting before maturity.|
|No. of Units||These funds do not limit when and how many units can be purchased by an investor. Investors can enter/exit at any time at the prevailing NAV. ||These funds have a fixed number of units that are issued during the New Fund Offering (NFO), which is similar to an IPO.|
|Liquidity||They are highly liquid.||To facilitate liquidity and allow investors to exit before maturity, these schemes are traded on the stock exchanges (NSE, BSE). |
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