Funds can be divided into broad and narrow senses. In a broad sense, funds are a collective term for institutional investors, including trust investment funds, unit trust funds, provident funds, insurance funds, retirement funds, and funds of various foundations.
Funds in the existing securities market, including closed-end funds and open-end funds, have the characteristics of income-generating functions and value-added potential.
From an accounting perspective, funds are a narrow concept, meaning funds with specific purposes and uses.
The main differences between closed-end funds and open-end funds are formed because the investors of the government and public institutions do not require investment returns and investment recovery, but require that the funds be used for designated purposes in accordance with legal provisions or the investor’s wishes.
The following points: 1. Total shares: The total shares of a closed-end fund are fixed from the time of issuance. Except for dividends and distribution, the number of shares remains unchanged.
The total number of open-end funds is based on the number of subscriptions. The number of subscriptions is constantly changing. If the number of subscriptions is greater than the number of redemptions, the total number of shares of the open-end fund is constantly increasing, and vice versa.
2. Except for special circumstances, closed-end funds have no impact on the fund regardless of profits or losses during its duration.
If the redemption amount of an open-end fund is too large and its total shares are less than a certain amount (for example, 200 million shares), the open-end fund will cease to be listed.
This forces fund managers of open-end funds to perform well.
3. Except for SSE ETFs and SZSE LOFS, all open-end funds are subject to redemption based on the closing price of the day, while closed-end funds are bought and sold in real time.
4. Closed-end funds are discounted. It is very likely that the market price of closed-end funds is lower than or higher than their net assets.
The market circulation price of a closed-end fund reflects its true value and is equivalent to the net asset value of its shares.