Open Ended Vs Close Ended Mutual Funds – In Detail

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Open Ended Vs Close Ended


Open-ended mutual funds are those which do not trade in the open market; they don’t have any limit as to how many units they can issue together. Because of the market fluctuations of stocks and shares and bond prices, NAV changes daily. The investments of the open-ended fund are valued at the fair-market which is also detailed under the closing market value of listed-public securities. Also, open-ended don’t have a fixed maturity period.   


As below:  

  • Track Record: In open-ended funds, the historical performance of the fund is available. Therefore, investing in open-ended is a well-informed decision an investor can make.  
  • Liquidity: These funds offer high-liquidity because you can redeem fund units as per your convenience. Also, open-ended offer the flexibility of redemption at the prevailing NAV.  
  • Systematic Investment Plan: Here, open-ended funds are a better option for salaried class of investors because they can initiate SIP into the fund of their own choice. 


Closed-ended mutual funds issue the number of units (fixed) that are traded on the stock exchange, moreover like an exchange-traded fund. At first, they are launched via NFO to raise money and later traded in the open-market like a stock. However, the fund value is based on the NAV; the actual price is affected by the demand and supply as it can trade at prices below or above its real or actual value. Thus, closed-ended funds can trade at discounts or premiums to their NAVs. A fixed maturity period is what closed-ended funds are carrying.   


  • Availability of Market Prices: These funds are traded on stock exchanges just like equity shares, thus, providing an opportunity to the investors to buy and sell units of the fund particularly based on real time prices which can be above/below the fund’s NAV.   
  • Stable Asset Base: Here, the investors cannot redeem units of the fund except when the maturity of the fund expires. This way, portfolio managers get a stable asset price which is not subjected to frequent redemptions.   
  • Flexibility & Liquidity: Investors are free to avail flexibility and liquidity offered by the fund. The investors get the flexibility to decide on their investments by using ‘real-time information’ 

The wholesome source is through: https://www.gulaq.com/difference-between-open-ended-and-closed-ended-mutual-funds/ 

Open Ended Vs Close Ended Mutual Funds – The Difference 

  • LiquidityOpen-ended schemes are liquid & can be redeemed anytime; whereas, closed-ended schemes have a lock-in-period. 
  • TradingOpen-ended schemes are not traded on stock exchange, whereas, closed-ended schemes are traded on stock exchanges. 
  • Fund ManagementOpen-ended schemes, the fund manager must stick to the scheme objective.; whereas, in close-ended schemes there is no such pressure of redemption on the fund manager.  
  • Net Asset Value (NAV)Buying open-ended schemes mean you are buying on the existing NAV of the scheme; whereas, closed-ended schemes have different NAV as compared to the buying price, because they are being traded on exchanges.  

Looking to invest in Direct Mutual Funds? Hop on to www.gulaq.com and fetch the funds according to your goals, risk-appetite, horizon, time-period, and expected returns. Else, you can raise the query at: [email protected]  


*Disclaimer: investment in securities market are subject to market risks, read all the related documents carefully before investing

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