NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Collective Investment Vehicles
Which of the following is a feature of a close-ended mutual fund scheme in India as compared with an open-ended scheme?
A close-ended scheme has a fixed maturity period, and investors typically exit by selling listed units on a stock exchange. Continuous purchase and redemption at NAV is a feature of open-ended schemes, not close-ended ones.
- AUnits are redeemable at NAV on any business day throughout the life of the scheme
- BUnits have a fixed maturity period and must be listed on a stock exchange for liquidityCorrect
- CThe scheme has no fixed tenure and sells units continuously
- DThe scheme can never be listed on a stock exchange
Explanation
A close-ended scheme has a fixed tenure, and after the new fund offer units are generally not sold or redeemed continuously. Investors get liquidity by trading units on a stock exchange where they are listed, or through a repurchase window if offered. The other options describe open-ended features or are wrong about listing.
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