Among the investment products we have come into contact with, the most widely known is probably the fund. However, it should be noted that funds can't be bought as they want, because some funds are closed-end funds, some are open-end funds, and some are special open-end funds. So below, we will focus on the differences between closed-end funds and open-end funds.

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

The difference between closed-end funds and open-end funds mainly lies in the way of existence, transaction, fund price, fund strategy and market conditions. The funds we can buy in the market are often open-end funds, and closed-end funds can only be bought within a certain period of time, so we need to pay attention to the differences in trading rules of these funds.

1 Open-end funds can often purchase and redeem fund shares at any time. Theoretically, the scale of these funds can be infinitely expanded and reduced. However, the scale of closed-end funds is often constant and has a clear duration. During this period, the issued fund shares cannot be redeemed, and the invested funds can only be traded in the secondary market.

The trading of closed-end funds is often limited by share redemption and can only be traded in the secondary market like stocks. Open-end funds can purchase and redeem fund shares through fund management companies or sales organizations, and there is no time limit.

The price of open-end funds is often determined by the net value after closing, and what is seen in the market is the estimated result, not statistics. The price of closed-end fund shares, like stock trading, is directly determined by the relationship between market supply and demand.

We can often see that closed-end funds hold relatively high positions, while open-end funds hold relatively more cash. This is because open-end funds should handle the purchase and redemption at any time, while closed-end funds can make all medium and long-term investments without reserve funds.

Open-end funds will have a perfect system because of the huge and messy user groups, but closed-end funds need investors with more investment experience to invest, because ordinary investors may not be able to calculate and identify the quality of closed-end funds.

To sum up, closed-end funds and open-end funds have these differences. Specific investment should pay attention to different people and find the investment that suits you.