Open-end mutual fund


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Open-End Mutual Fund

A mutual fund in which the number of shares may be increased or decreased depending on the amount of money invested in the company. This means that the fund's capitalization is not fixed and changes upon the demand of shareholders. In other words, an open-end mutual fund issues new stock when people invest in it and buys back old shares when investors want to be rid of them. The latter is referred to as redeeming one's share of the mutual fund. The value of each share is the net portfolio value divided by the number of shares. In the United Kingdom, this investment vehicle is usually called an open-end investment company.

Open-end mutual fund.

Most mutual funds are open-end funds. This means they issue and redeem shares on a continuous basis, and grow or shrink in response to investor demand for their shares.

Open-end mutual funds trade at their net asset value (NAV), and if the fund has a front-end sales charge, that sales charge is added to the NAV to determine the selling price.

NAV is the value of the fund's investments, plus money awaiting investment, minus operating expenses, divided by the number of outstanding shares.

An open-end fund is the opposite of a closed-end fund, which issues shares only once. After selling its initial shares, a closed-end fund is listed on a securities market and trades like stock. The sponsor of the fund is not involved in those transactions.

However, an open-end fund may be closed to new investors at the discretion of the fund management, usually because the fund has grown very large.

References in periodicals archive ?
Before the bulls started to run in 1982, there were about 400 open-end mutual funds.
Perhaps a better testimonial to investment opportunities is Morningstar's list of open-end mutual funds that have added South African companies to their holdings since December.
The Reaves Utility Income Fund is a closed-end fund and closed-end funds do not continuously issue shares for sale as open-end mutual funds do.
To the contrary, investors in traditional, open-end mutual funds are more inclined to buy and hold their portfolio for a longer period, with 66% investing for three or more years.
The open-end mutual funds managed by a Company subsidiary are Midas Fund, Inc.
Having previously served as Vice President and Manager of Inside Sales and Service at Nuveen Investments, Dennis joined Nuveen in 1989 and was responsible for comprehensive sales and support for the firm's closed-end funds, open-end mutual funds and separately managed account product lines, representing assets of approximately $125 billion.
Among other investments, Analytic currently manages two open-end mutual funds that utilize long-short equity strategies: the Analytic Defensive Equity Fund and the Analytic Global Long-Short Fund.