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. 3 ETF Signals You May Use For Confirmation
    Economics

    3 ETF Signals You May Use For Confirmation

  2. Are All ETF Correlations Barreling Towards ...
    Mutual Funds & ETFs

    Are All ETF Correlations Barreling Towards ...

  3. Why Did ETFs Become So Popular?
    Markets

    Why Did ETFs Become So Popular?

  4. How Bitcoin Casinos Work
    Investing Basics

    How Bitcoin Casinos Work

  5. How To Invest In The Nikkei 225
    Mutual Funds & ETFs

    How To Invest In The Nikkei 225

Trading Center