What is the difference between an open-end and a closed-end mutual fund?
Both open-end and closed-end mutual funds comprise a portfolio of securities (such as stocks and bonds) that is managed by a professional money manager. If you wish to invest in the fund, you buy shares. Basically, however, that is where the similarities end. A key difference between the two types of funds is that the number of outstanding shares of an open-end fund can vary dramatically from day to day, whereas shares of a closed-end fund are fixed in number. An open-end fund will issue new shares, or repurchase old shares, as needed to meet investor demand, depending on whether money is being added to the fund or shares are being redeemed. The per share price is determined by the net value of all assets held by the fund, divided by the number of shares. As mentioned, a closed-end fund has a fixed number of shares. You don’t purchase new shares from the fund; instead, you purchase existing shares from other investors. Shares are typically traded on an open market (stock exchange) wher
