What are close ended and open ended mutual funds?

Question

What are close ended and open ended mutual funds?

Answer 1

Open ended schemes are available for subscription at any time.  Investors can invest in the fund at any time.  Some open ended schemes put a limit on exit period.

Close ended schemes are available for subscription only during the NFO period.  After this the scheme operates for a specified duration and gives the returns to the investors.

Answer 2

The big difference is that open ended funds are always worth the value of the underlying assets, because the fund will buy back the shares at net asset value on any day you want.  If you no longer want a closed end fund, you must sell it to another investor, like any other stock.  This may be at higher or lower than newt asset value.

Answer 3

Some good reading on the two, including sections that compare the two:

http://en.wikipedia.org/wiki/Closed-end_...

http://en.wikipedia.org/wiki/Open-end_fu...