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Open-end fund

 
Investment Dictionary: Open-End Fund
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A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.

Investopedia Says:
Most of the mutual funds available in the marketplace are open-end funds. Open-end funds are generally managed actively and are priced according to their net asset value (NAV). Open-end funds are wide-ranging. Some Open-end funds are more conservative and provide consistent returns with low risk, and some are more aggressive in seeking to make capital gains through constant trading.

Related Links:
Learn about the basics - and the pitfalls - of investing in mutual funds. Mutual Fund Basics Tutorial
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This popular investment vehicle has seen its share of ups and downs, successes and scandals. Read all about it here. A Brief History Of The Mutual Fund
Although less popular than their open-ended counterparts, these investment vehicles are worth a second look. Open Your Eyes To Closed-End Funds
If you're looking to generate income for your investments, look no further. Uncovering Closed-End Funds
Is the growth of mutual funds always good? Find out why a bigger fund isn't necessarily better. Does Size Really Matter?


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Banking Dictionary: Open-End Fund
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Type of Investment Company that sells new shares to the public and stands ready to buy back (redeem) its shares at the market price when investors wish to sell. Open-end investment companies are better known to the public asMutual Funds and are so named because these companies are continually creating new shares when they sell securities. Consequently, the Net Asset Value of mutual funds increases or decreases as investors buy shares or redeem them. Funds typically invest in a variety of financial instruments, including common stocks, corporate bonds, tax exempt bonds, and short-term money market instruments. Contrast with Closed-End Fund.

WordNet: open-end fund
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Note: click on a word meaning below to see its connections and related words.

The noun has one meaning:

Meaning #1: a regulated investment company that regularly sells and redeems its shares
  Synonyms: mutual fund, open-end investment company

Wikipedia: Open-end fund
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An open-end(ed) fund is a collective investment scheme which can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself rather than from the existing shareholders. It contrasts with a closed-end fund, which typically issues all the shares it will issue at the outset, with such shares usually being tradeable between investors thereafter.

Open-ended funds are available in most developed countries, though terminology and operating rules vary. U.S. mutual funds, UK unit trusts and OEICs, European SICAVs, hedge funds and exchange-traded funds are all examples of open-ended funds.

The price at which shares in an open-ended fund are issued or can be redeemed will vary in proportion to the net asset value of the fund, and therefore directly reflects the fund's performance.

Contents

Fees

There may be a percentage charge levied on purchase or sale of shares—in this case, the fund is a "load fund"; if there are no such charges levied, the fund is "no-load". However, brokerages may charge commissions for the purchase of even no-load funds, and there might also be other fees associated with no-load funds, such as yearly maintenance fees in IRA accounts and redemption fees designed to discourage shareholders from jumping in and out of funds in an attempt at market timing.

Active management

Most open-end funds are actively managed, meaning that a portfolio manager picks the securities to buy, although index funds are now growing in popularity. Index funds are open-end funds that attempt to replicate an index, such as the S&P 500, and therefore do not allow the manager to actively choose securities to buy. These fees are commonly referred to as 12b-1 fees in U.S.

Net asset value

The price per share, or NAV (net asset value), is calculated by dividing the fund's assets minus liabilities by the number of shares outstanding. This is usually calculated at the end of every trading day.

Hedge funds

Hedge funds are typically open-ended and actively managed. However, their NAV is typically calculated monthly.

Examples

U.S. mutual funds:

See also

v • d • e
Investment management
Collective investment scheme structures
Investment Styles
Theory & Terminology
Related Topics

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

 
 

 

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Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Banking Dictionary. Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
WordNet. WordNet 1.7.1 Copyright © 2001 by Princeton University. All rights reserved.  Read more
Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Open-end fund".  Read more