open-end investment company(redirected from Open-Ended Investment Companies)
Also found in: Dictionary, Thesaurus, Acronyms, Encyclopedia.
Open-End Investment Company
open-end investment company
Open-end investment company.
An open-end investment company issues and redeems, or buys back, shares in the mutual funds it sponsors on a continuous basis in response to investor demand.
The company pools money it raises by selling shares in a fund and the fund's manager invests in stock, bonds, money market instruments, or a combination of these asset classes to meet the fund's specific objectives.
However, the open-end company may stop selling new shares in a fund if it decides the fund has grown too large to invest additional assets effectively.
In contrast, when a closed-end investment company creates a fund, it issues only a limited number of shares, and those shares trade on the secondary market as shares of stock do.
If you purchase fund shares directly from the open-end investment company, you pay the current net asset value (NAV) per share. You also redeem shares at the NAV that's current at the time you sell. If you buy shares through a broker or other investment professional, you may pay an up-front sales charge, or load, in addition to the NAV.