In an open-ended mutual fund, there is no restriction on the number of shares the fund can issue. The open-ended funds can issue and redeem shares at anytime during the life of the fund. A majority of the funds issued today are open-ended. This video by Khan Academy explains how open-ended mutual funds work.
Introduction to Mutual Funds
Open Ended Mutual Funds Redemptions
This video by Khan Academy explains the concept of open-ended mutual funds in more detail. It explains how NAV is calculated and how new shares are issued and how the mutual fund company redeems the shares. An open-ended fund can keep creating new shares as well as redeeming shares. This creates a problem for the […]