A Report On Open Ended Scheme

1188 Words Dec 3rd, 2016 5 Pages
Open-ended Scheme
In this scheme size of the fund is not predetermined as entry to or exit from the fund is open to investor who can buy or sell its securities to the fund at any time. This characteristic imparts greater liquidity to the units of these funds along with the pre-determined repurchase price based on declared Net Asset Value. Portfolio mix of such schemes consists of actively traded securities in the market, preferably equity shares. As investors can anytime withdraw from the fund, therefore, the management of such funds is quite tedious.
Close-ended Scheme
This scheme has deposit redemption date unlike open ended scheme. These fund have fixed capital base and are traded among the investors in secondary market. The forces of demand and supply, hence determine their price. Price is free to deviate from its net asset value. Management of such funds is comparatively easier because manager can evolve long-term investment plans depending upon the life of the scheme.
Within these two broad operational classifications we can have following subclassifications:
1. Return-based Classification (i) Income funds
These are for investors who are more concerned about regular return from investments.
(ii) Growth Fund Here the objective is to achieve an increase in value of investment through capital appreciation and not the regular income.
(iii) Conservative Funds These funds aim at giving reasonable rate of return in addition to capital appreciation.
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