Should I invest in a five year closed-end micro cap fund by Sundaram Mutual Fund?
Transcript: Normally, you should avoid investing in closed-end funds. It is very important for a small equity investor to average his purchase cost through SIP. And when you invest in a closed-end fund, you can invest only at the beginning. Another reason is liquidity. In a closed-end fund you cannot withdraw your money before the stipulated time, five years in this case. Technically, they are listed but no-one trades in closed-end funds. So, you won't be able to retrieve your money before five years, even if you need it. Closed-end structure is good for a micro or small-cap fund but according to me averaging out through regular purchases and liquidity is an important factor for investors and you should look at other options and not just closed-end funds.