Here we will understand the Difference between Open-ended and Closed-ended Mutual Fund with Example and also learn which one is better for investment.
A mutual fund is an investment in a portfolio of stocks, bonds, and other financial securities, looked after by a professional and experienced fund manager.
Open ended funds are those that are always open to investment or redemption. This means that these funds can be bought or sold at any point of time.
Normal mutual funds, hedge funds and exchange-traded funds (ETFs) are all example of Open-ended Mutual Funds.
Closed ended mutual funds are those that can ONLY be bought during initial opening (NFO). These funds cannot be bought once the NFO Period is Over.
Municipal Bond Fund is a Good Example of Closed-ended Mutual Fund.
Open-ended funds have high liquidity. Closed-ended funds have no liquidity.
Open -ended Mutual Fund is best investment option for Beginners because of Liquidity, Diversification and SIP Option.