The main differences between open-end funds and closed-end funds are as follows:
(1) The variability of fund size is different. Closed-end funds have a clear duration (not less than 5 years in China), during which the issued fund shares cannot be redeemed. Although this kind of fund can be raised under special circumstances, it must meet strict legal conditions. So in general, the size of the fund is fixed. And the list of funds issued by open-end funds.
Bit is redeemable, and investors can also buy fund units at will during the duration of the fund, resulting in the total amount of funds of the fund constantly changing every day. In other words, it is always in an "open" state. This is the fundamental difference between closed-end funds and open-end funds.
(2) There are different ways to buy and sell fund shares. When a closed-end fund is initiated, investors can subscribe to the fund management company or sales organization; When closed-end funds are listed and traded, investors can entrust brokers to buy and sell at market prices on the stock exchange. When investors invest in open-end funds, they can purchase or redeem them from fund management companies or sales organizations at any time. (Source: www.dianjin.com)
(3) The buying and selling prices of fund shares are formed in different ways. Because closed-end funds are listed on the exchange, their buying and selling prices are greatly influenced by the relationship between market supply and demand. When the market supply is less than the demand, the buying and selling price of the fund unit may be higher than the net asset value of each fund unit, and then the fund assets owned by investors will increase; When the market supply exceeds demand, the fund price may be lower than the net asset value of each fund unit. The transaction price of open-end funds is calculated based on the net asset value of the fund unit, which can directly reflect the level of the net asset value of the fund unit. In terms of fund transaction costs, investors have to pay a certain percentage of securities transaction tax and handling fee in addition to the price when buying and selling closed-end funds, just like buying and selling listed stocks; The related expenses (such as initial subscription fee, redemption fee, etc.) that investors of open-end funds need to pay are included in the fund price. Generally speaking, the transaction cost of closed-end funds is higher than that of open-end funds.
(4) The investment strategies of funds are different. Since closed-end funds cannot be redeemed at any time, all the raised funds can be used for investment, so that fund management companies can formulate long-term investment strategies and achieve long-term business performance. On the other hand, open-end funds must keep some cash so that investors can redeem it at any time, but not all of it is used for long-term investment. Generally invest in assets with strong liquidity.
There is no special difference in return between the two.
The main difference between open-end funds and closed-end funds is that the latter has a long closed period and a fixed number of issues. The holder can't redeem it during the closed period and can only buy and sell it in the secondary market. Moreover, open-end funds can be redeemed, and listed open-end funds can also be bought and sold.
Therefore, open-end funds have to "always be ready" for the possible redemption of their holders, and their investment style is relatively stable; Closed-end funds do not have to worry about redemption during their existence.
Everything has its good side and bad side. It is precisely because closed-end funds don't have to worry about redemption, similar to the holder lending money to the fund company for stock trading, and agreeing to pay back the money after 5 years, 10 years and 20 years. I'm not sure if I'm interested In these years, the holder can't ask the fund company to pay back the money in advance. Therefore, fund companies have great autonomy in this money and can even play the trick of "interest transfer".
Of course, there are also well-run fund companies and fund managers, whose closed-end funds are not necessarily worse than open-end funds.
To sum up, the landlord should decide what kind of fund to buy according to his investment preference, risk tolerance, understanding and trust of fund companies and fund managers, and long-term judgment of the market.