MUTUAL FUND CLASSIFICATIONS
1. OPNE ENDED FUNDS
2. CLOSE ENDED FUNDS
1. OPEN ENDED FUNDS:-
•In an open ended fund, investors can buy and sell units of the fund, at NAV related prices, at any time, directly from the fund.
• Investors receive account statements of their holdings
• The number of outstanding units goes up and down.
• The unit capital is not fixed but variable.
2. CLOSE ENDED FUNDS:-
•A closed -end fund is open for sale to investors for a specified period, after which further sales are closed.
• Open ended scheme are offered for sale at a pre- specified price, say Rs. 10, in the initial offer period. After a pre-specified period say 30 days, the fund is declared open for further sales and repurchases.
• The corpus of an Open-ended scheme changes everyday.
2. CLOSE ENDED FUNDS:-
•A closed -end fund is open for sale to investors for a specified period, after which further sales are closed.
• Any further transactions happen in the secondary market where closed-end funds are listed.
• The price at which the units are sold or redeemed depends on the market prices, which are fundamentally linked to the NAV.
INVESTMENT PLANS
ž Broadly 2 options- Growth option and Dividend Option.
ž Automatic Reinvestment Plans– Reinvestment of amount of dividend made by fund in the same fund and receive additional units. It gives Benefit of Power of Compounding.
ž Systematic Investment Plans( SIP) – For regular investment.
ž Systematic Withdrawal Plan ( SWP) – For regular income ( it is not similar to MIP)
ž Systematic Transfer Plan ( STP) – Transfer on a periodic basis a specified amount from one scheme to another within the same fund family.
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