What is Close Ended Mutual Fund - Smart Working

Close Ended Mutual Fund 

Mutual Fund is the best way for investment. There are two type of mutual fund on the Base of structure close ended and open ended . Today we will discuss what is Close Ended Mutual Fund .
What is Close Ended Mutual Fund
What is Close Ended Mutual 

What is Close Ended Mutual Fund #:-

These fund issue a fix number of share that traded on Stock Market . When share is sold , the fund does not issue new share .

This fund is for a fixed period of time in which your fund locks for that time.

Unit of close ended fund can be buy or sell through broker . Price of NAV be obtained by from news paper and website.

The value of mutual fund is increase when the interest and dividend earned on investment are added in fund .

Stock price and debt interest when increase then value of fund is also increase .

How Close-Ended Mutual Fund Work #:-

These funds have fixed period and fixed number of unit. The Net Asset Value of this fund does not change on daily basis . 

One has to invest in lump sum amount at the time of NFO (new fund offer ) . 

Invester do not have any option to buy or sell after NFO close . Exiting holder also can not exite there position till term end. 

Open-ended investment allow to Invester to buy or sell any time but there is specific rule to inter and exite at special time .

If any person want to exite there position in between term so they can exite with some penalty .

When the fund term has been end then your all about has been transfer in your account .

As compare to other investment this fund is good because there you will get lum sum amount .

Advantage of Close Ended Mutual Fund #:-

Professional Manager :- These investment is managed by professional fund manager .
This expertise allow to Invester to invest in market .

Theme Based : This Funds is usual invest on basis of theme so that can give you huge return in short period of time .

Flexibility :- Due to lock in period sudden redemption is not allow so this is give better flexibility to mange funds .

Asset allocation :- This fund is invest at least 50-60 stock so that can reduce risk and also good asset allocation to the funds.

Disadvantage of Close Ended Mutual Fund #:-

No SIP :-  There is no SIP plan available in this fund because there one time investment in lum sum . It's problem for those type of people who depend on their monthly salary they can't invest in this scheme . 

Lock In Period :- This scheme have lock in period , it mean when you required emergency fund at that time you can't whitdraw it . If you want withdrawal so you have to pay penalty for that. 

Lum Sum Investment :-  For start in this scheme there large amount is required .
A small person can't arrange this fund and they can not easily work in this fund .

Aslo Read :-
   Who regulates mutual funds in India
   Types of mutual fund in India
    Open ended Mutual Fund 
    How to earn 1 lac per month from stock market ?

Conclusion :-

Close Ended scheme is for fixed period of time . Once you invest in lum sum then you have to wait for 3 to 5 year . We can't exite their position in between term . 

If you any confusion related to the article you can contact me on instagram . 

Follow me on instagram (Praveen Prajapat ) : https://www.instagram.com/praveenprajapat2410

Post a comment


6 Reason why you must invest in stock market - Smart Working