Open-end fund: it is a fund operation mode that the scale of fund issuance is not limited, the fund shares can be sold to investors at any time according to their needs, and the issued fund shares can be redeemed at the request of investors, and there is no duration limit.
brief introduction
The difference between closed-end fund and open-end fund
Difference 1: Does the fund scale change during its existence?
Closed-end fund:
After the successful raising of closed-end funds, the scale is fixed during its existence, and investors' subscription and redemption are not accepted.
If it is 500 million when the fund is raised successfully, it will always be 500 million during the fund's existence. Closed-end funds will stipulate the fund raising scale in the fund raising documents when they are issued.
In the second case, the fund is not welcomed by investors, and the subscription scale is less than 654.38+0 billion, and the CSRC has a prescribed threshold. If it reaches 80% of the approved scale, and the raised funds are not less than 200 million yuan, it will be regarded as successful. If the subscription amount of a fund is 500 million, then the final size of this fund is 500 million.
Open-end fund:
When an open-end fund is issued, it will not limit the issuance scale of the fund, and there is no upper limit on how many subscriptions it can accept. As long as the minimum size required by the CSRC is 200 million yuan. Moreover, during the fund's existence, open-end funds accept investors' subscription and redemption. When new investors subscribe, the total fund size will increase correspondingly, and when investors redeem their shares, the total fund size will decrease accordingly, and the fund size will change at any time.
Difference 2: The duration is different.
Closed-end fund:
When a closed-end fund is issued, its establishment period will be specified, which is generally 10 year or 15 year, that is, after the expiration, the fund will be liquidated and the funds will be returned according to the share held by investors.
However, under normal circumstances, after the expiration of the duration of the fund, there is not necessarily only one way to deal with liquidation. At present, there are three treatment methods in the market.
1. Extend the term of the fund contract and continue to close the life of the fund, and the fund share in the hands of investors has not changed accordingly.
2. According to the term of the fund contract, the closed-end fund shall be liquidated and paid to the share holders according to the net value of the fund.
3. Closed-end funds shall be "closed to open", that is, closed-end funds shall be converted into open-end funds upon expiration. Open-end funds: Open-end funds have no duration requirement. As long as the scale is not too low to reach the liquidation line due to excessive redemption by investors, open-end funds can always exist.
Difference 3: trading places is different.
Closed-end fund:
After the successful fundraising, it will be listed on the exchange, and it can only be traded on the exchange, which is what we call floor trading, and it can only be bought and sold through stock accounts. If you hold a closed-end fund and want to sell it, you can only trade it on the floor. You can't get the funds until other investors buy the shares you sell. If you want to buy a closed-end fund, you can only buy it if there are other investors selling shares in the market.
Open-end fund: You can buy and redeem fund shares from fund companies and consignment agencies at any time.
Difference 4: Different investment strategies.
Closed-end fund:
Since closed-end funds cannot be redeemed at any time, all the funds raised can be used for investment, so that fund management companies can formulate long-term investment strategies and achieve long-term business performance.
Open-end fund: In order to deal with the redemption of investors' shares at any time, it is necessary to reserve some cash for redemption, but not all of it can be used for long-term investment, and generally invest in assets with strong liquidity.
Difference 5: The price formation mechanism is different.
Closed-end fund: the price is directly determined by the relationship between market supply and demand. Just like stock trading, if someone buys and someone sells, then a new price will be formed and the corresponding fund share price will change accordingly.
Open-end fund: the price is determined by its net value. For example, if the average income of a fund investing in stocks on that day is 1%, then the net value will increase 1%. If it was originally 1 yuan, the net value of the fund share will increase by 1% to 1.0 1 yuan, and the fund share will be confirmed as 1.0 1 yuan before 3 pm on the same day.