THE BEECHMONT CREST ONLINE GUIDE TO STOCKS AND INVESTING
OPEN vs. CLOSED ENDED MUTUAL FUNDS
-Mutual funds may be open- or closed-ended.
-Open-ended funds can be bought by anyone at anytime, at the net asset value (NAV) price. (NAV per share = total fund assets divided by the outstanding shares, minus any liabilities.)
-The shares of an open-ended mutual fund are always increasing or decreasing, based on the number of shares sold to the public.
- A closed-ended fund has a fixed number of shares.
- There is one initial sale of shares. After the initial sale, shares of the fund trade like a stock (but no new shares are issued). Existing shares of the fund can be acquired from sellers through the exchanges or the OTC markets.
-The value of the shares of a closed-ended fund fluctuates like the value of a stock. At any given time, it may be selling at a price that is either above or below NAV. The price is dependent on supply and demand, based on market factors and the performance of the fund.