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.

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References in periodicals archive ?
Shareholders of open-end mutual funds buy shares at net asset value (NAV), which is the market value of a fund share.
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If the conversion is approved by shareholders and consummated, shareholders of FTT would become shareholders of the new open-end mutual fund and would be permitted to redeem their shares of the new open-end mutual fund at net asset value, subject to a one percent redemption fee for the first six months after the consummation of the conversion.
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27 /PRNewswire/ -- Liberty ALL-STAR Equity Fund (NYSE: USA) announced today that, in accordance with the commitment made when the fund was organized in 1986, shareholders will be given the opportunity to vote on whether to convert the fund to an open-end mutual fund at their 1993 annual meeting, to be held in Boston on April 6.
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The proposed statement would establish fair value standards for investments in interest-earning investment contracts, external investment pools and open-end mutual funds, as well as debt and equity securities, option contracts, stock warrants and stock rights for which fair value is readily determined.
GASB proposes change from cost-based accounting

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