Partner With Us

Understanding the difference between open ended and closed ended mutual funds

Mutual funds are classified according to various factors, including their sector, size, asset class and flexibility. These include open ended funds and closed end funds. The fundamental difference is that while an open ended fund opens to investors on a continuous basis, a closed end fund is only available for a limited period of time.

Here are a few other differences between the two funds: 


You can buy or sell open ended funds at any time, but you can buy closed-ended funds only during NFO (New Fund Offer) or from the stock exchange after they are listed. In the case of an open-ended fund, the fund is open for a subscription even after the closure of NFO and the units can be redeemed whenever required by the investors. But in the case of a closed-ended scheme, the fund liquidates once it crosses the maturity date, and the funds are distributed to subscribers based on their holdings. In few cases, closed-ended funds can be converted into open-ended funds after maturity.

Fixed Corpus

While open ended funds don’t have a fixed maturity or corpus, the closed funds have a fixed corpus and a term usually ranging from three to five years. So if you are looking to invest in a closed ended fund, you must be prepared to block those funds for a specified period. In an open ended fund, however, you can buy or sell whenever you want. The constant buying and selling in an open-ended fund makes the corpus variable, while in a closed ended scheme, the corpus is fixed at a specified limit.

Liquidity and listing

The liquidity in the case of open ended funds comes from the actual fund, while in the latter it comes from the market. An open ended fund, however, is not listed on the stock exchange, and all transactions are performed directly through the fund. Closed ended funds are listed on a reputed stock exchange to provide liquidity to the investors.

Unit Price

You can transact in the open ended mutual fund at the existing NAV (Net Asset Value) of the scheme. Unit price is also known as NAV. However, closed ended scheme prices may be different from the NAV because they trade on exchanges.

There are other technical differences in both funds, but the above are the fundamental differences which should influence your decision on whether to invest in closed ended or open ended mutual funds, or both.


Disclaimer: ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Most Popular

  • 27 Sep 2021
  • ICICI Securities

The Five Rules of Investing in Equities

Investment in equity should be made by following certain rules. There are five rules of equity investments. They arise from an understanding of the stock market and mitigate the chances of making mistakes and incurring losses.

  • 27 Sep 2021
  • ICICI Securities

Investment Rules: 5 Thumb Rules of Investing in Market

While you work for money, suitable investments make your money work for you. How you take control of your finances determines the growth of your wealth and additional income streams. Click here to read about the five golden rules you can follow while investing.

  • 15 Sep 2021
  • ICICI Securities

5 Most Popular Reasons for Switching Bank

In the beginning, you would hear from them quite often. But of late, you're noticing more and more signs that it's no longer working. We are referring to your relationship with your bank. Click here to read how to recognize the red flags in your banking relationship and why it might be a good time to end the bond.

  • 15 Sep 2021
  • ICICI Securities

How Intraday Trading Works? Detailed Ideas

Intraday trading in India has been gaining momentum of late. It is no longer the option of only trade pundits.

  • 15 Sep 2021
  • ICICI Securities

What is Intraday trading? A Beginner's Guide

With the advancement of technology and increased knowledge about the stock market, trading is no more a domain dominated by stock pundits.

  • 05 Sep 2021
  • ICICI Securities

Is it Good To Invest in Cyclical Stocks?

Akin to how the pedals of a cycle go up and down as it moves forward, the share price of certain stocks goes up and down in accordance with the economic cycles a country goes through. 

  • 05 Sep 2021
  • ICICI Securities

A primer on Fixed Maturity Plans

If you happen to have some surplus funds which you don’t need for a specific period, but you don’t want to take the risk of investing this money in the stock market, you can very well put this money in a Fixed Maturity Plan or FMP. 

  • 05 Sep 2021
  • ICICI Securities

How to Choose the Best Equity Mutual Fund

You must have heard a lot about investing in mutual funds. But before jumping on this trend you need to assess a mutual fund scheme according to your goals, investment horizon, risk profile, liquidity needs and many other factors to find a suitable match. 

  • 05 Sep 2021
  • ICICI Securities

A Beginner’s Guide to Monetary Policy Tools

The Reserve Bank of India has the incredibly crucial responsibility to formulate the monetary policy. The main objective of monetary policy is to control inflation and provide a conducive environment for the country's economic growth. 

  • 05 Sep 2021
  • ICICI Securities

Buying Penny Stocks and its Risks

There is a specific category of stocks whose prices are very low and they seem to yield exponential returns. But do you know that investment in such stocks could be risky? 

Open an Account

Sign Up for Free


Please use the mobile no registered with Aadhaar.

OTP sent to +91 1234567890

Didn’t received OTP? Resend



Get Research Backed Recommendations.

Download The app now

or Scan below QR Code To download app