What Is Open-Ended Mutual Fund?


An open-end mutual fund issues a total number of shares that investors want to buy. It also buys shares back from investors. On the other hand, closed-end funds limit the number of shares that it issues. It also doesn’t allow you to buy back shares. As per Savepro, a financial advisor, the total value of an open-end share is equal to the net asset value (NAV). The NAV is calculated by decreasing the liabilities from the fund’s total asset value and then dividing the amount from total shares outstanding.

Also, Savepro suggests investors choose open-ended funds over close-ended funds. This is because of varied reasons. Firstly, open-end funds offer investors to meet their investment objectives, such as investing in small and large-cap companies or investing for growth, etc. Secondly, it helps investors build a diversified portfolio. Third, the fund is closed to new investors if the asset value of the funds becomes too large for its objectives. Lastly, open-end funds are not older than closed-end funds that date back to 1893.

But, according to Savepro, there are many pros and cons of open-end funds. The pros of these funds suggest that these funds decrease risks, are highly liquid, cost very low investment and diminish the risk of investment. There are also a few cons of open-end funds. They are only priced once a day and yield lower returns than closed-end funds. Also, these funds have high fees and expenses and require investors to have high cash reserves.

But before making any decision, investors must take advice from financial advisors like Savepro. Suggestions from such companies can help to create a diversified portfolio. The company can also help investors to re-balance their financial portfolio. Doing, so at the beginning of the year will help to maximize profits and minimize losses all year long. 

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