An open-end fund, also called a mutual fund, is a type of investment vehicle that pools money from multiple investors to create a diversified portfolio of securities such as stocks, bonds, or other assets. Unlike closed-end funds, open-end funds have no fixed number of shares and can issue additional shares as demand increases or redeem shares as investors wish to sell.
Open-end funds are managed by professional fund managers who make investment decisions based on the fund's investment objectives and strategies. They aim to provide investors with a convenient and cost-effective way to access a diversified portfolio that aligns with their investment goals.
One key feature of open-end funds is that they are priced based on their net asset value (NAV), which is calculated by dividing the total value of the fund's assets by the number of outstanding shares. The NAV is typically calculated at the end of each trading day, and investors buy or sell shares at the NAV price.
Investors in open-end funds have flexibility in their investment as they can buy or sell shares at any time. The fund company, acting as the market maker, is obligated to repurchase shares from investors wishing to sell, at the current NAV price. This feature provides liquidity to investors, making it easier for them to enter or exit the fund based on their investment needs.
Overall, open-end funds offer a widely accessible and regulated investment option for individuals seeking professional management of their investments, diversification, and ease of trading.
