NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Which feature of an open-ended mutual fund scheme differs from a closed-ended scheme?
An open-ended scheme lets investors buy and redeem units directly from the fund on an ongoing basis at NAV-linked prices. Closed-ended schemes have a fixed tenure, with exit mainly through exchange listing or maturity.
- AUnits can be bought and redeemed directly from the fund at NAV-based prices on an ongoing basisCorrect
- BUnits can be traded only on the stock exchange
- CUnits have a fixed maturity after which no redemption is allowed
- DThe scheme cannot invest in equity
Explanation
Open-ended schemes offer continuous purchase and redemption with the fund house at NAV-linked prices. Closed-ended schemes have a fixed tenure and are generally exited through exchange listing or at maturity. Equity investment is allowed in both types.
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