Types of Mutual Fund

There are two types of Mutual Funds:

• Open-Ended Mutual Fund
• Closed-Ended Mutual Fund

Open-Ended Mutual Fund

An open-ended mutual fund is the fund whose units are issued directly to investors based on the fund’s net asset value (NAV) that is calculated on daily basis. They have no fixed  maturity date. Investors can easily purchase and sell the units with the fund management company of the transaction days NAV value. Open ended mutual funds offer SIP, through which one can invest a certain amount monthly, quarterly or yearly.

Close-Ended Mutual Fund

A Close-ended mutual fund is the fund that has a fixed maturity period and are traded in stock market. The maturity time of the funds is generally between 3-15 years. The share units of these mutual funds can be subscribed initially during the initial public offering and then can be bought and sold in stock exchange like other shares according to the demand and supply of the units.