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Liquidity in Close-Ended Fund

Does every close-ended fund trade on exchanges? If somebody invests in a close-ended fund, the units will appear in his demat account. How will he redeem them on maturity? - A Birla

Does every close-ended fund trade on exchanges? If somebody invests in a close-ended fund, then the units will appear in his demat account. Then how will he redeem them to the fund house after the tenure of the fund gets over?
— A Birla


A close-ended fund has to get listed if the fund house does not provide any liquidity window during the time period when the fund remains closed. At present, there is just one such fund -Morgan Stanley Growth Fund. This is excluding the exchange traded funds (ETFs) which do trade on the stock exchanges but are quite different from close-ended funds in their structure.

The recently-launched close-ended funds are not listed on the stock exchanges because they are more of interval funds as they provide liquidity window intermittently when the units can be redeemed directly from the fund house. Therefore, they can do away with the listing.

To redeem the units of a close-end fund after it completes its tenure, an investor can produce his demat account statement reflecting the number of units he holds. The fund house may do the necessary verifications and redeem the units.

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