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    Results 1 to 9 of 9

    Thread: What is the difference between open and closed investment funds?

    1. #1
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      Default What is the difference between open and closed investment funds?

      What is the difference between open and closed investment funds?


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      An OPEN END FUND is a portfolio of assets which is diversified, this is created by the pooling of investors money. Examples are hedge funds, mutual funds, exchange traded funds etc etc. In this type of fund system, the investors sells the share directly to the investors based on the current net value of the asset.
      A CLOSED END FUND is a system whereby a company sells its shares to the Public through an initial public offering (IPO) so as to raise money. After shares are open to the public, the company does not issue any other shares or redeem it back instead the shares can be sold out to other investors.
      DIFFERENCES
      1. Open-end funds are offered through a fund company that sells shares directly to investors.
      closed-end fund has a fixed number of shares and they are offered by an investment company through an (IPO) initial public offering.
      2. Open end funds are the time of the day which is set by the fund managers whereas Closed-end funds can be traded at any time of the day so far the market is open.
      3. Prices in an Open-end fund are fixed once in a day at their net asset value and that is the price at which the fund shares can be purchased that day. Whereas Closed-end funds can be bought and sold at any price throughout the day.
      4. An open end fund doesn't always include other investments like the closed-end fund which is more likely to include alternative investments such as futures, derivatives or foreign currency in its portfolios.


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      The main difference between closed investment funds and open investment funds is how the structure is structured and how they are bought and sold by investors. There are also some significant differences in investments that make up the portfolio of funds.

      Open investment and closed investment funds have some of the same basic characteristics. Both are professionally managed funds and achieve diversification by investing in a collection of shares or other investment assets rather than in one share.

      The two pools of resources from many investors can invest on a larger and wider scale.

      Open investment funds are offered through fund companies that sell shares directly to investors. The number of shares is not fixed and theoretically unlimited. The fund sells as many shares as the investor wants to buy.

      In contrast, closed investment funds have a fixed number of shares offered by investment companies through an initial public offering. After that, closed fund shares are traded on an exchange, like individual shares. Investors acquire stock funds by buying them on the exchange through an intermediary account.


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      An open-end fund is a type of mutual fund that does not have restrictions on the amount of shares the fund can issue. The majority of mutual fund are open-end, providing investors with a useful and convenient investing vehicle. When a fund's investment managers determine that a fund's total assets have become too large to effectively execute its stated objective, the fund will be closed to new investors, and in extreme cases, will be closed to new investment by existing fund investors.

      While a Closed Ended Fund is the type of mutual fund that offers new units or shares to investors only for a limited period. It has fixed maturity period, e.g. 3 to 5 years. The liquidity provider is the stock market. They are listed on the recognized stock exchange for trading. Price of shares is determined by demand and supply.


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      The primary differences between closed end funds and open-end funds lie by the way they are composed and how they are purchased and sold by speculators. There can likewise be some huge contrasts in the speculations that make up the assets portfolios. Open-end and shut end funds do share a few fundamental qualities for all intents and purpose. Both are expertly overseen reserves that accomplish expansion by putting resources into a gathering of values or other money related resources, as opposed to in a solitary stock. Both pool the assets of numerous financial specialists to have the option to put resources into a bigger and more extensive scale. A closed-end fund has a fixed number of offers offered by a venture organization through a first sale of stock (IPO). From that point, shut end finance shares are exchanged on a trade, much the same as an individual stock. Financial specialists get support shares by obtaining them on the trade through a money market fund. The cost of offers in a shut end subsidize is more intelligent of the market than the net resource estimation of the store itself.


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      There are many differences between closed end mutual funds and open end mutual funds these differences are :

      The difference in the meaning :
      - Open end mutual fund : is a type of mutual funds that an investor can buy shares from, where it offers new units based upon a continuous basis .
      - Closed end mutual fund : is a type of mutual funds that an investor can buy shares from, only during the new fund offer, where it offers new units based upon a limited period only .

      The difference in the subscription :
      - Open end mutual fund : its subscription remains open on a regular basis, where these funds are available for subscription through out the year .
      - Closed end mutual fund : its subscription doesn't remain open but it is open for a short period only typically from one to three months during specific days .

      The difference in the liquidity provider :
      - Open end mutual fund : its liquidity provider is the fund it self that provide the liquidity to it .
      - Closed end mutual fund : its liquidity provider is the stock market that provide the liquidity to it .

      The difference in the maturity period :
      - Open end mutual fund : its maturity period is not fixed so there is no fixed maturity period to it .
      - Closed end mutual fund : its maturity period is fixed and it can normally range from two to five years .

      The difference in determining the price :
      - Open end mutual fund : its price is determined by the following formula : net asset value per share = the total net assets / the number of outstanding shares .
      - Closed end mutual fund : its actual price is determined by the demand and supply and its value can be determined by net asset value per share .
      Last edited by elssayed; 05-15-2019 at 11:24 PM.


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      Closed funds and open funds is sustainable or to be placed or situated in how they are arrange in working order and how they are obtain in exchange for money or goods and to transfer goods or provide services in exchange for money by investors. They can as well exist in certain having noticeable effect unlike most others investments which set up the funds portfolios and the investments performed various noticeably different in having the same relationship, each to each other and both contribute to a common fund, on the basis of a mutual division of profits or losses to make a common interest of the resources of many investors to easy to use to invest in big and extensively size. Closed fund allocated amount are traded on act of exchanging or trading exactly like an individual stock. Investors secure financial instrument by process of seeking and obtaining them on the exchange by means of entering a brokerage account and if price use in common in a closed fund is in greater number is apply to a task or purpose of the market than the net value of the money and closed funds can take place at any period of 24 hours at a time the market is open while open funds are traded at a certain price or under certain conditions to order or control by the fund managers and are to present by means of a money company which sells to have in common in as absolute or unconditional to investors and the number of shares in an open fund is not stable and is unlimited.


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      Open and closed investment funds, the main difference between these two types of investment funds is in their organization and how they are been bought and consequently put on the market for sale by the investor. They are also very similar in the sense that they help the investor to pull his resources together in other to have more money to invest in higher assets and businesses. A closed-end fund has a fixed number of shares offered by an investment company through an initial public offering. Open and closed investment funds are very much different in the timing of their transactions, open funds trades once in a day while, closed investment funds trade throughout the day.


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      Open investment funds are the funds raised through Companies who deal with selling of stocks or shares to the interested investors.Such funds are mutual funds,hedge funds etc. In this case the investment is diversified from the available funds in the pool and the investors transact deals with one another.There is a fixed price for transaction on a daily basis
      Closed investment funds are the types whereby the Company that intends to raise funds goes ahead to deal directly with the investors through Initial Public Offering(IPO).In this case there is no room for diversification and a fixed number of shares to be sold are always known.The prices fluctuates regularly even intra-day


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