Among the many classifications of funds, I believe that the most common ones are closed and open. So what is a closed-end fund and what is an open-end fund?

First of all, from the name, the main difference between the two types of funds is obvious: one is closed and the other is open. It is almost the difference between a captive "base" and a stocking "base".

When the closed-end fund was established, the scale and duration of the fund had been determined. After the release, it will be "closed to practice". During the closed period, investors cannot purchase and redeem at will, and the fund size and share remain unchanged.

Open-end fund, as opposed to closed-end fund. After the fund raising, investors can still purchase and redeem, and the fund size and share are not fixed.

Note: Open-end funds here refer to general open-end funds, excluding transactional open-end index funds (ETFs) and listed open-end funds (LOF).

What's the difference between closed-end funds and open-end funds?

Investment period

Closed-end funds generally have a fixed duration. The duration of closed-end funds in China is more than 5 years, mostly around 15 years.

Open-end funds are generally open-end.

Share restriction

Closed-end funds, after being closed, may not be purchased and redeemed without legal procedures. Therefore, during the closed period, the share of the whole fund is fixed. (Closed-end funds can be raised under special circumstances, but the raising must meet strict legal conditions. )

Open-end funds, the scale is not fixed, investors can purchase or redeem at any time, and the fund share will increase or decrease accordingly.

trading place

Closed-end funds can apply for listing on the exchange if they meet certain conditions. After listing, it will be converted into an on-site fund. At this point, investors can buy and sell fund shares in the market. Since floor trading is the transfer of fund shares among investors, the size of the whole fund remains unchanged.

Listing conditions of closed-end funds:

1, and the term of the fund contract should be more than 5 years;

2. The number of fund holders shall be no less than 65,438+0,000;

3. The total amount of the fund is not less than 200 million yuan;

4. Other conditions stipulated in the rules for listing and trading of fund shares.

Open-end funds, generally not listed on the exchange, belong to OTC funds. That is, transactions can be conducted through channels such as fund companies, banks and third-party sales organizations. The funds we buy and sell at any time, such as Tian Tian Fund Network, Egg Roll Fund and Alipay, are all open-end funds.

Price system

After the listing of closed-end funds, the buying and selling prices are mainly affected by the relationship between supply and demand in the secondary market. When the demand is strong, the transaction price will exceed the net value of fund shares, resulting in a premium; When the demand is depressed, the transaction price will be lower than the net value of the fund share, resulting in a discount.

Open-end funds, the buying and selling price is based on the fund share, which is not affected by the relationship between supply and demand. The difference in price mechanism between closed-end funds and open-end funds is the same as that between on-market funds and off-market funds. Missed friends can click here to check: after understanding these 9 points, I finally know whether to choose on-site funds or off-site funds.

submerge

Closed-end funds, because investors can not purchase and redeem at any time, the pool of funds is fixed. Therefore, when the fund performs well, it cannot attract new funds and continue to make big cakes. When the fund does not perform well, it will not face the pressure of fund redemption.

Open-end fund, because investors can purchase and redeem at any time, if the fund performs well, it will attract investors to buy. At this time, the fund scale will increase, and the management fee income of fund institutions will also increase. If the fund does not perform well, it will face the pressure of investors rushing to redeem it.

Compared with closed-end funds, open-end fund managers have better incentive and restraint mechanisms.

investment strategy

Closed-end funds, because they cannot be redeemed at any time, will be locked as long as they "close the door". Fund managers can invest all their funds without worrying about being redeemed. In addition, there is a long and clear investment period, which can make long-term investment strategies and achieve long-term performance.

Open-end funds, because investors may purchase and redeem at any time, have certain interference to the fund investment arrangement, and fund managers need to pay attention to risk management such as liquidity. In order to cope with redemption, it is usually necessary to keep certain funds or financial products with strong liquidity such as investment bills and certificates of deposit, but not all of them can be used for long-term investment. This is not conducive to the long-term performance of the fund to some extent.

To sum up, open-end funds are more flexible than closed-end funds. If there is a temporary demand for funds, open-end funds can be redeemed at any time. In addition, if the income of the purchased fund is not good, it can also be redeemed at any time to replace other funds. Of course, if you are going to make long-term investment and don't want to be affected by the short-term market, you can also choose closed-end funds.