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Friday, January 14, 2011

Open-ended Mutual Funds

Open-ended Mutual Funds
What are Open-ended Mutual Fund Schemes?
Open-ended Mutual Fund Schemes is one of the types of Mutual Funds in India. An Open-ended Mutual Fund does not confine itself to a given set of number for the shares. In other words, the number of shares remains non-confined and thus technically it serves as an open ended instrument. A greater part of the Mutual Funds in India are open-ended. The Open-ended Mutual Fund Schemes in India are more general than the closed-ended Mutual Fund Schemes.

Features of Open-ended Mutual Fund

These are the following distinctiveness of the Indian open-ended Mutual Funds:-

 The open-ended Indian mutual fund schemes have soaring liquidity as the investors can put and take out their many as and when they require.
 The total assets of the open-ended Mutual Fund oscillate with the in and out flow of money.
 This type of fund permits the investors to buy the shares or sell the shares directly, any time.
 Based on the existing NAV (Net Asset Value), this type of fund issues fresh shares to the investors and redeem them once the investor makes a assessment to sell the shares.
 The fund can issue limitless shares and individual share value remains unaltered by the shares outstanding.
 The net asset value (NAV) of the fund determines the value of each share.
Remuneration of Open-ended Mutual Fund
Open ended Mutual Funds provide a number of remuneration which is as follows:
 These funds maintain a lot of elasticity. This is to say that one can draw your money out any point of time.
 The funds can be diversified under the range of kinds of investment opportunities. This way you can garner the fruits of different investment options.
 The majority of the open mutual funds do not charge any fees while transferring a range of funds within the same family.

Hazard of Open-ended Mutual Fund

There are also some risks implicated with the open-ended Mutual Fund, which are as follows:-

 The returns are unnatural when abrupt redemptions result in a decline in the value of portfolio.
 The fund returns may also get pretentious by the various types of market forces.
 Open ended Mutual Funds cannot be traded in the stock market.


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