Open ended vs close ended mutual funds: Where you should invest?
- Mutual funds are generally categorized into 2 categories i.e. open ended and close ended funds.
Mutual funds are generally categorized into 2 categories i.e. open ended and close ended funds. However, there are key differences between these two types, so investors should be aware that while open ended funds can be purchased or sold at any point of time implying enough flexibility in nature, close ended funds have a lock-in period until maturity and can only be purchased during the launch of new fund offer periods (NFO) and redeemed at the end of the tenure of the fund. Since SIPs may be used to invest in open-ended funds, rupee cost-averaging benefits are also available. In contrast, close-ended funds can only be purchased with a lump sum of money, and as the fund's strategy implies, open-ended funds have high liquidity while closed-ended funds have none. Apart from those key differences, what are the other differences between both fund categories and where investors should invest, let's find out from our experts' opinion.
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