In the fund market, according to the different modes of fund operation, it can be divided into open-end funds and closed-end funds. Open-end fund refers to a fund with a fixed scale, because under normal circumstances, investors can purchase and redeem the fund at any time according to market conditions, which leads to the unfixed fund scale, while closed-end fund is a fund with a fixed fund scale. Before the fund is issued, the fund manager will determine the scale of the fund, and after the scale raising is completed during the raising period, the fund will be closed.

Open-end funds and closed-end funds have their own characteristics. Which is better or worse? We can compare the two first.

Fund size

The variability of open-end funds and closed-end funds is different. This difference is also the fundamental difference between open-end funds and closed-end funds. The scale of open-end funds is not fixed, and there is no limit to the scale of funds. Open to investors, who can freely purchase and redeem. So the scale of funds is basically changing every day. Closed-end funds have a clear duration. Under normal circumstances, the size of the fund is fixed, and the closed period of the fund is usually between six months and five years.

Way of buying and selling

Open-end funds can be purchased and redeemed at any time through fund companies and consignment agencies. Except for newly issued funds (the closed period of newly issued funds generally does not exceed 3 months), closed-end funds can be subscribed through fund companies or fund consignment agencies when they are launched, and can be traded on the stock exchange through brokers after listing, which is not available for open-end funds.

Price formation model

The price of open-end fund is the net value of the fund, and the net value of the fund is the net asset value of the fund unit, so the price of open-end fund directly reflects the net asset value of the unit. Because closed-end gold is listed and traded on the exchange, the price of the fund may be higher than the net assets of each fund unit or lower than the net assets of the fund unit. The price will be affected by the relationship between market supply and demand. If the price is higher than the net assets of the unit, the fund assets it owns will increase.

transaction cost

Closed-end funds are traded on the exchange through brokers after listing, and their transaction costs are similar to those of stock trading, such as collecting commissions. The transaction costs of open-end funds include subscription fees or subscription fees, redemption fees and other fund management fees. Generally speaking, the transaction cost of closed-end funds is higher than that of open-end funds.

investment strategy

Due to the advantages of closed-end management, closed-end funds are more convenient to formulate long-term investment strategies, and all the funds raised can be used for investment. Open-end funds are open management, and investors may redeem the funds at any time, so they need to reserve some cash, and the invested assets are easy to realize.