Open-ended mutual fund is an investment vehicle where an investor purchases units either directly from a mutual fund management company, through a brokerage house, or a bank. Some of the well-known mutual fund families, consisting of multiple fund types, are (to name just a few):
Since many investment companies offer a wide variety of funds within a family, an investor can easily find a suitable type and diversify among investment styles, asset classes, industries, and countries. An investor, for example, can choose between equity or fixed income fund, or a blend of both. Within an equity fund, a choice can be made among value and growth funds; small, medium, or large cap funds; and domestic or international ones.
Also, an industry can be chosen (i.e., technology, natural resources, health care). Within fixed income, an investor can choose a fund that invests in money market instruments; sovereign, municipal, or corporate bonds; either domestically or internationally. Funds that mimic various indices (i.e., S&P 500) can also be found and these normally have lower fees than their counterparts that are actively managed.
Open-ended means that the number of shares can fluctuate depending on deposits and withdrawals. It is in contrast to closed-ended funds where the number of shares stays fixed.
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Introduction to Investing in Mutual Funds
One of the easiest ways to start investing is with open-ended mutual funds. The range of options is very comprehensive as many investment companies manage mutual funds.
Even though investing in mutual funds in simple, investors need to learn the basics