A Guide on Open-End Funds
Updated on Monday 26th November 2018
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The main characteristic of an open-end fund refers to the fact that its investors can issue an unlimited amount of shares, as oppossed to the closed-end fund, in which the number of shares are limited. Investors who are interested in setting up an investment fund as an open-ended structure should know that they can invest in stocks and bonds.
The main traits of an open-end fund
As mentioned above, in an open-ended vehicle, the investors will be allowed to issue an unlimited number of shares. Such shares can be sold and purchased on the local exchange market based on their net asset value (NAV).
Regardless of the jurisdiction in which the fund is registered, the NAV is calculated taking into consideration the value of the fund’s underlying assets. The procedure is always performed at the end of the transaction day.
One of the main advantages of the open-end fund is that the investors are not required to invest a large sum of money and thus, the fund can be a useful tool for a wide range of businessmen.
Businessmen interested in setting up an investment fund must know that in an open-end vehicle, the associates will have to pool their financial resources and to establish an investment strategy, in order to meet the financial objectives for the respective fund.
Open-ended funds can be established as mutual investment vehicles, but there are numerous types of funds investors can choose from, depending on the jurisdiction in which they want to start their investments.
Other aspects related to the open-end funds
A major aspect that should be taken into consideration by those interested in how to start a fund registered as an open-ended vehicle refers to the fact that it is necessary to appoint a portfolio manager. At the same time, this type of structure is very advantageous for the investors who are interested in a stable investment, but with a lower return on investment compared to other structures.
Investors are invited to contact our team of affiliates for more details on the registration of an open-end fund.