Types of Mutual Funds Based on Structure

The structure of a mutual fund provides flexibility and makes it easy to sell/purchase the fund. Based on the structure, the types of mutual funds in India are:

  • Open-Ended Mutual Funds: Open-Ended Mutual Funds are available for sale or purchase all throughout the year. The purchase or redemption of the funds are at the ongoing NAVs (Net Asset Values). As a result, investors can continue investing according to their need and for future growth. There is no limit on investment amount. These funds are highly liquid as the funds do not have any maturity period.
  • Close-Ended Mutual Funds: The Investors can purchase units only during the initial offer period. Investors can redeem units after the completion of a specified maturity period. Since they lack the liquidity as open-ended mutual funds, close-ended mutual funds trade on the stock exchange to compensate for the same.
  • Interval Funds: Interval Funds fulfill the gap between open-ended and close-ended mutual funds. Much like close-ended mutual funds, they are available as an initial offering and then open for the repurchase of shares by the Fund Manager at different intervals during the tenure of the fund.

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