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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles

Under SEBI rules, which of the following is a feature of an open-ended mutual fund scheme as compared with a closed-ended scheme?

An open-ended mutual fund scheme lets investors buy and redeem units on an ongoing basis at NAV-related prices. Closed-ended schemes instead have a fixed maturity, a fixed unit count and usually exit through exchange listing.

  1. AUnits can be bought and redeemed at NAV-related prices on an ongoing basisCorrect
  2. BUnits can be redeemed only on maturity and are listed on exchanges
  3. CThe number of units is fixed at the time of the new fund offer
  4. DInvestors can exit only by selling on the stock exchange

Explanation

Open-ended schemes offer continuous subscription and redemption at NAV-related prices, so the unit capital changes. The other options describe closed-ended schemes, which have a fixed maturity and typically trade on exchanges.

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