In open ended funds the units are sold continuously during the life of a scheme. Similarly the unit holders are free to redeem their units at prevailing NAV at any time. Hence number of units/unit holders fluctuates everyday.
Units in the open-ended schemes do not have a fixed maturity period. These schemes have variable capitalization. These funds are not listed on the exchange and investors need to directly approach the company or their agents/dealers for any transaction. An open-ended fund allows an investor to enter the fund at any time, or to invest at regular intervals. The issuing company directly takes the responsibility of providing liquidity to the investors when they want to liquidate their investments.
Daily NAV calculation – investors can buy or sell units at NAV-related prices from and to the mutual fund on any business day. As per the recent SEBI guidelines fund houses shouldn’t levy any entry load (marketing and advertisement charges) on the purchases. Investors will directly pay to the dealer and the dealer has to disclose the charges. If you skip the dealer and directly go to the fund house/TA there is no need to pay entry load. Sale price could be subject to exit load. Fund can also charge fees on contingent and deferred basis.
Sathish Emmadi
Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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- Disadvantages of Mutual funds
- Classification of Mutual Funds
- History of Mutual Funds
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