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 restrict itself to a given set of number for the shares. In other words, the number of shares remains non-confined and thereby technically it serves as an open ended instrument. A majority of the Mutual Funds in India are open-ended. The Open-ended Mutual Fund Schemes in India are more common than the closed-ended Mutual Fund Schemes.

Features of Open-ended Mutual Fund

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

This type of fund permits the investors to purchase the shares or sell the shares directly, any time.
Based on the current NAV (Net Asset Value), this type of fund issues fresh shares to the investors and redeem them once the investor makes a decision to sell the shares.
The open-ended Indian mutual fund schemes have high 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 fluctuate with the in and out flow of money.
The fund can issue limitless shares and individual share value remains unaffected by the shares outstanding.
The net asset value (NAV) of the fund determines the value of each share.

Benefits of Open-ended Mutual Fund Schemes in India

Open ended Mutual Funds provide a number of benefits which are as follows:

These funds maintain a lot of flexibility. This is to say that one can draw your money out any point of time.
The funds can be diversified under the various kinds of investment opportunities. This way you can reap the fruits of different investment options.
Most of the open mutual funds do not charge any fees while transferring various funds within the same family.

Risks of Open-ended Mutual Fund

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

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

Advantages of Open ended Mutual Fund

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