Open-Ended Fund (CEFS) vs Close-Ended Fund
Mutual Funds can either be open-ended or close-ended funds. Most are open-ended funds. Here are the primary features of both:
- A fund that continually creates new shares on demand (although the manager can close it if they think the fund is getting too big).
- You can purchase the shares at Net Asset Value (NAV) (see above). You can redeem them (sell) at any time at the value of the NAV directly from the fund.
- Usually trades at the end of the market day.
- It may or may not have a sales commission attached to it.
- A fund that has a fixed number of shares.
- Usually listed on the stock exchange. You can actively buy or sell them.
- Since its shares are traded on the market, they can be traded any time during the market day.
- Since it is a stock, it always has a commission associated with it.