investing

open-end fund

A mutual fund that continuously issues and redeems shares at net asset value, with no fixed number of shares outstanding.

Example

“Traditional mutual funds are open-end funds — investors buy and redeem at NAV, and the fund creates or cancels shares accordingly.”

Memory Tip

OPEN-END fund = unlimited shares, always priced at NAV. The standard mutual fund structure.

Why It Matters

Open-end funds are the most common type of mutual fund that everyday investors use for retirement accounts and investment portfolios. Understanding how they work helps you know when you can buy or sell your shares and how the fund adjusts its size based on investor demand.

Common Misconception

Many people think that once a fund reaches a certain size, it stops accepting new investors, but open-end funds have no limit on the number of shares they can issue. They will continue to accept new money and create new shares as long as investors want to buy in.

In Practice

If you invest 5000 dollars in an open-end mutual fund with a net asset value of 50 dollars per share, you receive 100 shares. If you decide to sell those shares a month later when the net asset value is 52 dollars per share, you receive 5200 dollars, and the fund redeems your 100 shares and reduces its total outstanding shares accordingly.

Etymology

OPEN (no limit on shares) END (unlimited) FUND. A FUND OPEN to unlimited share creation and redemption.

Common Misspellings

open end fundopen-end-fundopend end fund

Related Terms

closed-end fund mutual fund

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