As we all know, funds can be divided into open-end funds and closed-end funds according to different modes of operation. For beginners who have just entered the fund gate, the definition and difference between the two may be unfamiliar. Let me start with open-end funds and closed-end funds, and talk to you about the differences between open-end funds and closed-end funds. I believe it can deepen the novice's understanding of the fund.
To know the difference between open-end funds and closed-end funds, we must first understand what is an open-end fund and what is a closed-end fund. Open-end fund refers to a fund operation mode that the fund share is not fixed and can be purchased or redeemed at the time and place agreed in the fund contract. Closed-end fund refers to a fund operation mode in which the fund share is fixed within the term of the fund contract, and the fund share can be traded on a legally established stock exchange, but the fund share holder may not apply for redemption.
After understanding the definition of open-end fund and closed-end fund, I will introduce the difference between them now. First of all, the first and most obvious difference between them is the different duration. Open-end funds have no fixed term; Closed-end funds have a fixed closed period. In addition to the different duration, the price is formed in different ways. The transaction price of open-end funds is based on the net value of fund shares and is not affected by the relationship between supply and demand; Closed-end funds are mainly affected by the relationship between supply and demand in the secondary market. Different share restrictions are also their differences, and the scale of open-end funds is not fixed; Closed-end funds have fixed shares.
Of course, the difference in trading places is also a difference between them. Open-end fund investors can apply to the fund management company or its sales agency for subscription or redemption, and the transaction is completed between the investor and the fund management company; After closed-end funds are raised, only securities companies can be entrusted to buy and sell at the market price on the stock exchange, and the transaction is completed among investors. Another difference between open-end funds and closed-end funds is the difference in redeemability. Open-end funds have legal redemption rights. Closed-end funds cannot be redeemed during the closed period.