Complete Guide To Investment Companies, Funds And REITs

AAA

Mutual Funds - Open-Ended And Closed-End Funds

From a structural perspective, mutual funds can typically be broken down into two types.

Open-Ended Funds
These funds dominate the mutual fund marketplace, in terms of volume and assets under management. With open-ended funds, purchases and sales of fund shares take place directly between investors and the fund company. There's no limit to the number of shares the fund can issue; as more investors buy into the fund, more shares are issued. Federal regulations require a daily valuation process, called marking to market, which subsequently adjusts the fund's per-share price to reflect changes in portfolio (asset) value. The value of the individual's shares is not affected by the number of shares outstanding.

Related Readings

Closed-End Funds (CEF)
These funds issue only a specific number of shares through an initial public offering and do not issue new shares as investor demand grows. Prices are not determined by the net asset value (NAV) of the fund, but are driven by investor demand. Purchases of shares are often made at a premium or discount to NAV.

Related Readings:

Popular Fund Types
comments powered by Disqus
Related Articles
  1. Finding And Investing In FHA Condos
    Investing Basics

    Finding And Investing In FHA Condos

  2. Understanding The Bond Behemoth That ...
    Mutual Funds & ETFs

    Understanding The Bond Behemoth That ...

  3. Choosing The Right ETF Index To Reach ...
    Investing News

    Choosing The Right ETF Index To Reach ...

  4. Technology Dividends Offer Income Opportunity
    Investing News

    Technology Dividends Offer Income Opportunity

  5. Alternatives To Pimco's Total Return ...
    Bonds & Fixed Income

    Alternatives To Pimco's Total Return ...

Trading Center