Open end mutual fund

An open end mutual fund is a fund that continually buys and sells new shares at the current market price. That is, the fund has no restriction on the total number of shares that can be sold. The fund is considered to be open because its total net asset value changes on a daily basis as shares are bought and sold. Most mutual funds are structured to be open ended, making it easy for investors to buy and sell their shares. The managers of these funds must maintain a cash reserve in order to pay back investors who want to sell back their shares.

The manager of a fund may decide that the amount invested in it has become so large that it is no longer possible to attain the investing objectives of the fund, in which case the fund will be closed to additional investments. At that point, it is designated as a closed end fund.

Related Courses

Corporate Cash Management 
Corporate Finance 
Treasurer's Guidebook