Close-ended Mutual Fund Schemes is one of the types of Mutual Funds in India. Opting for the close-ended mutual fund schemes will offer you with definite compensation that other types of mutual fund schemes would not. An emergent number of Indians are now opting to invest their money in close-ended mutual fund schemes.
What is a close-ended mutual fund scheme?
A close-ended mutual fund scheme clearly stipulates the maturity period, which could be wherever in 2 to 15 years of time. One has to make investments into any close-ended mutual fund scheme as soon as they are issued. Afterward on, you are free to buy or sell close-ended mutual fund scheme units when they are listed on the stock exchange.
Once the units are listed on the stock exchange, the market price of the close-ended mutual fund scheme units may vary based on factors like:-
The outlook of the unit holders
Demand for & supply of scheme units
Usually, the units of the close-ended mutual fund schemes are traded on the stock exchange at a price less than its Net Asset Value or NAV. On approaching maturity, the difference between the scheme unit's trading price and NAV may thin drastically.
The Way a close-ended mutual fund scheme paybacks the fund manager:-
Liquidity management- Since a close-ended mutual fund scheme has a rigid term before it matures; the fund manager does not have to be bothered about the corpus at his disposal. In an open-ended scheme, the fund manager will have to deal with inflow and outflow of money on a persistent basis, leaving the person with only a vague idea of how the corpus would look over a certain period of time. In other words, a close-ended mutual fund scheme paybacks a fund manager in terms of proficient liquidity management.
Safekeeping from short-term market fluctuations
Close-ended mutual funds offer a certain security from short-term market fluctuations vis-à-vis the investments managed by the fund managers. The flat term for maturity allows fund managers to work with investments on a long-term viewpoint.
Various Close-ended mutual fund schemes in India
Some of the companies providing various types of close-ended mutual fund schemes in India has been listed below.
Birla Sun Life Mutual Funds
HDFC Mutual Fund
LIC Mutual Fund
Kotak Mahindra Mutual Fund
Franklin Templeton Mutual Fund
ICICI Prudential Mutual Fund
Sundaram Mutual Fund
Tata Mutual Fund
Standard Chartered Mutual Fund