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What is Close End Funds?
Closed-end funds are mutual funds or unit trusts that issue only a limited number of shares for public trading. The trading price of a mutual fund or unit trust set up as a closed-end fund is often influenced by the supply and demand for the shares outstanding. This is in contrast to other mutual funds/unit trusts that tend to trade based on the net asset value of the underlying security. The conditions of the fund are usually announced at the time of the initial public offering.
Because the price associated with a closed-end fund is dictated mainly by the market price, the competition for these types of funds can become quite fierce. The additional incentive has to do with the limited availability of the shares. Since only a limited amount of shares are made available for public trading at any given time, investors who consider the closed-end fun to be highly desirable may actively compete to secure the shares. This will often drive up the market price that the shares can command.
What is Open End Funds?
Closed-end funds are mutual funds or unit trusts that issue only a limited number of shares for public trading. The trading price of a mutual fund or unit trust set up as a closed-end fund is often influenced by the supply and demand for the shares outstanding. This is in contrast to other mutual funds/unit trusts that tend to trade based on the net asset value of the underlying security. The conditions of the fund are usually announced at the time of the initial public offering.
Because the price associated with a closed-end fund is dictated mainly by the market price, the competition for these types of funds can become quite fierce. The additional incentive has to do with the limited availability of the shares. Since only a limited amount of shares are made available for public trading at any given time, investors who consider the closed-end fun to be highly desirable may actively compete to secure the shares. This will often drive up the market price that the shares can command.
What is Open End Funds?