Open-end fund (or open-ended fund) is a

collective investment scheme An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

that can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself, rather than from the existing shareholders. The term contrasts with a

closed-end fund A closed-end fund (CEF) is a fund that raises capital by issuing a fixed number of shares which are not redeemable, and then invest that capital in financial assets such as stocks and bonds. Unlike open-end funds, new shares in a closed-end fund ...

, which typically issues at the outset all the shares that it will issue, with such shares usually thereafter being tradable among investors. Open-ended funds are available in most developed countries, but the terminology and operating rules vary. US

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICA ...

s, UK

unit trust A unit trust is a form of collective investment constituted under a trust deed. A unit trust pools investors' money into a single fund, which is managed by a fund manager. Unit trusts offer access to a wide range of investments, and depending on ...

s and OEICs, European SICAVs, and

hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...

s are all examples of open-ended funds. The price at which shares in an open-ended fund are issued or can be redeemed will vary in proportion to the net asset value of the fund and so directly reflects its performance.

Fees

There may be a percentage charge levied on the purchase of shares or units. Some of these fees are called an initial charge (UK) or 'front-end load' (US). Some fees are charged by a fund on the sale of these units, called a 'close-end load,' that may be waived after several years of owning the fund. Some of the fees cover the cost of distributing the fund by paying commission to the adviser or broker that arranged the purchase. These fees are commonly referred to as 12b-1 fees in US. Not all fund have initial charges; if there are no such charges levied, the fund is " no-load" (US). These charges may represent profit for the fund manager or go back into the fund.

Active management

Most open-end funds are actively managed, meaning that a portfolio manager picks the securities to buy, although

index fund An index fund (also index tracker) is a mutual fund or exchange-traded fund (ETF) designed to follow certain preset rules so that the fund can a specified basket of underlying investments.Reasonable Investor(s), Boston University Law Review, avai ...

s are now growing in popularity. Index funds are open-end funds that attempt to replicate an index, such as the S&P 500, and therefore do not allow the manager to actively choose securities to buy.

Net asset value

The price per share, or NAV ( net asset value), is calculated by dividing the fund's assets minus liabilities by the number of shares outstanding. This is usually calculated at the end of every trading day.

Forward Pricing Rule 22c-1

Based on the forward pricing rule (22c-1); funds and their principal underwriters, and dealers must sell interests in the fund based on the Net Asset Value (NAV) which is calculated daily. This helps to mitigate shareholder dilution, as well as increasing efficiency.

Hedge funds

Hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...

s are typically open-ended and actively managed. However, investors can typically redeem shares only monthly or less frequently (e.g., quarterly or semi-annually).Lemke, Lins, Hoenig and Rube, ''Hedge Funds and Other Private Funds: Regulation and Compliance'' (Thomson West, 2014-2015 ed.).

Examples

U.S.

s: *

T. Rowe Price T. Rowe Price Group, Inc. is an American publicly owned global investment management firm that offers funds, subadvisory services, separate account management, and retirement plans and services for individuals, institutions, and financial inter ...

Fidelity Investments Fidelity Investments, commonly referred to as Fidelity, earlier as Fidelity Management & Research or FMR, is an American multinational financial services corporation based in Boston, Massachusetts. The company was established in 1946 and is o ...

' Magellan *

The Vanguard Group The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania, with about $7 trillion in global assets under management, as of January 13, 2021. It is the largest provider of mutual funds and the second-l ...

's S&P 500 *

PIMCO PIMCO (Pacific Investment Management Company, LLC) is an American investment management firm focusing on active fixed income management worldwide. PIMCO manages investments in many asset classes such as fixed income, equities, commodities, a ...

Total Return *WorldCommodity Fund

References

{{DEFAULTSORT:Open-End Fund Investment funds fr:OPCVM pt:Fundo de investimento