Close Ended Mutual Fund
>> Monday, January 16, 2012
Closed end mutual funds are very popular type of mutual funds available all over the world.
All most all the mutual fund companies operate globally with these funds and they are very simple to understand and also to operate. These funds are classified on the basis of its structure. Here the fund is opened for subscription only for a specified period of time.
They have a stipulated maturity period say 3 to 15 years. the investors can invest in closed end mutual funds at the time of the initial public issue and there after they can buy or sell the units of the scheme in the open market as well in the stock exchanges listed.
The repurchase of the fund is based on the terms of the fund. Periodic repurchase is done based on the net asset value related price.
Initial offering and distinguishing features
An typical investor always chooses closed end mutual funds in secondary market from a broker or from other investors and then repurchase the shares at the end of its life period.
The price of this fund is measured by value of investments in the fund i.e. in the present value or the market value with some premium or discount on it depending on the market factors. The initial offering is similar to a company where they make public offer and they all will be traded in the secondary market and the investors shall buy or sell any security in their portfolio.
Closed end mutual funds are very safe compared to others since they are traded in the stock exchange itself and they can be traded at any time during the market hours unlike the others.
The most important point in this fund is that they can have both listed and unlisted securities and they can be traded both in the stock exchange as well as in the open or the secondary market.
Features of the fund
Like companies these fund also have preferential rights and the holders are divided into preferred stock holders and common stock holders something similar to equity share holder in a company.
The preferred stock holders benefit from total expenses while the common share holders bear only those belonging to common share holder.
Some of the popular closed end mutual funds in the market are Adam express company, foreign and colonial investment, tri Continental Corporation etc.
In these funds the cash is kept lesser and the investment is made at large scale hence the potential of greater returns and decreased risk is enabled. Thus these funds are very safe to small and secured investors.
All most all the mutual fund companies operate globally with these funds and they are very simple to understand and also to operate. These funds are classified on the basis of its structure. Here the fund is opened for subscription only for a specified period of time.
They have a stipulated maturity period say 3 to 15 years. the investors can invest in closed end mutual funds at the time of the initial public issue and there after they can buy or sell the units of the scheme in the open market as well in the stock exchanges listed.
The repurchase of the fund is based on the terms of the fund. Periodic repurchase is done based on the net asset value related price.
Initial offering and distinguishing features
An typical investor always chooses closed end mutual funds in secondary market from a broker or from other investors and then repurchase the shares at the end of its life period.
The price of this fund is measured by value of investments in the fund i.e. in the present value or the market value with some premium or discount on it depending on the market factors. The initial offering is similar to a company where they make public offer and they all will be traded in the secondary market and the investors shall buy or sell any security in their portfolio.
Closed end mutual funds are very safe compared to others since they are traded in the stock exchange itself and they can be traded at any time during the market hours unlike the others.
The most important point in this fund is that they can have both listed and unlisted securities and they can be traded both in the stock exchange as well as in the open or the secondary market.
Features of the fund
Like companies these fund also have preferential rights and the holders are divided into preferred stock holders and common stock holders something similar to equity share holder in a company.
The preferred stock holders benefit from total expenses while the common share holders bear only those belonging to common share holder.
Some of the popular closed end mutual funds in the market are Adam express company, foreign and colonial investment, tri Continental Corporation etc.
In these funds the cash is kept lesser and the investment is made at large scale hence the potential of greater returns and decreased risk is enabled. Thus these funds are very safe to small and secured investors.
0 comments:
Post a Comment