NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Which of the following is a defining feature of a close-ended mutual fund scheme compared with an open-ended scheme?
A close-ended scheme sells units only during the New Fund Offer and has a fixed tenure. Afterwards, investors exit by trading units on a stock exchange or through repurchase on specified dates, unlike open-ended schemes that offer continuous sale and redemption at NAV.
- AUnits are bought and sold at NAV on every business day directly from the fund
- BUnits are sold only during the New Fund Offer and thereafter are traded on a stock exchange or repurchased on specified datesCorrect
- CThe scheme has no fixed maturity and never lists
- DThe fund must always invest only in debt securities
Explanation
A close-ended scheme raises money during the NFO and has a fixed tenure. After that, investors exit through exchange trading or repurchase at maturity. Continuous purchase and sale at NAV is a feature of open-ended schemes, so option A is wrong.
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