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Home / Mutual Funds

Mutual Funds

Types of Mutual Funds

Mutual funds can be broadly classified into two categories namely, Open-ended Funds and Close-ended Funds.

Open-ended Funds

The concept of these funds is that the investors are free to enter and exit the scheme at any point of time during the fund period. The investor can purchase/ sell units of mutual funds from/ through the mutual fund trust. 

The price at which the units are purchased/ sold depends on the Net Asset Value (NAV) of the fund at that point of time as specified by the funds. The NAV of the fund is the current market value of their investments. 

Besides the Net Asset Value, certain funds take an additional charge from the investors in the form of entry/ exit loads. Some examples of open-ended funds are 

• Alliance'95 (D)
  
  
• Birla Advantage Fund
  
  
• GIC Growth Plus II

Close-Ended Funds

In the case of Close-Ended Funds, the investors have to lock their funds with the trust for a particular period of time as specified by the terms of the offer. The main problem for the investor is that they cannot move in/out of the fund freely. In the case of Close-Ended schemes the prices of the units are calculated in the same manner as in the case of open-ended Schemes. However these schemes do not charge an entry/ exit load as in the case of open-ended schemes.

Click here to view the Classification of Mutual Funds.

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