Question

1) How do open ended funds differ from closed ended funds?

2) If you buy a mutual fund are you diversified as they own many different securities?

3) What's the difference between an equity REIT and a mortgage REIT? Are they both equally good as an inflation hedge?

Answer 1

1.Difference between Open ended Funds and Close ended funds

a)A close end fund has a fixed number of shares offered by an investment company through an initial public offering.Whereas open end funds are offered through a fund company that sells shares directly to investors.

b)when you think of mutual fund,Open ended mutual fund gives utmost liberty and flexibility to investors to enter and exit as and whenever they feel like whereas Close ended mutual fund offers a fixed timeline to investors for participating in and out of the fund.

c)Closed End Funds can be traded at any time of the day when the market is open.However,Open ended funds are traded at times dictated by fund managers during the day.

d)Prices for open ended funds are fixed once a day at their NAV and reflect the fund's performance whereas Close end investment shares reflect market values rather than the NAV of the fund itself.