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

Which feature distinguishes a closed-ended mutual fund scheme from an open-ended scheme in India?

A closed-ended scheme sells units only during the new fund offer and has a fixed maturity. Investors exit mainly by selling on the stock exchange or through specified repurchase windows, unlike open-ended schemes, which allow continuous purchase and redemption at NAV.

  1. AUnits are bought and sold directly with the fund at NAV on any business day throughout the year
  2. BUnits are issued during a fixed offer period and have a stated maturity, with liquidity usually through stock exchange listing or periodic repurchaseCorrect
  3. CThe scheme can invest only in government securities
  4. DThe scheme has no NAV declared

Explanation

A closed-ended scheme has a fixed tenure and units are sold only during the new fund offer. Investors exit through exchange listing or repurchase windows. Continuous purchase and redemption at NAV is the feature of open-ended schemes, so option A describes the wrong type.

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