Closed-End v/s Open-End

I am new to mutual funds and want to know about close and open ended MF. What are the risks involved and which is the safe option to start with?
- Kirtan Singh

An open-end fund is one that is available for subscription all through the year and investors can buy and sell units at Net Asset Value (NAV) related prices. Compared to this, closed-ended funds are those that have a limited time period when they are open to subscription. The risk involved between these two types of funds hinges on liquidity. While open-ended funds are highly liquid, as per stipulated Sebi regulations; closed-ended schemes have to offer an exit route to investors, which is in the form of the AMC buying back units or the units being listed on the stock exchange for investors to buy or sell. You should look at starting with an open-ended fund scheme to invest.

This article was originally published on July 01, 2011.