Term of the Day - open-end fund
For Tuesday, January 6, 2009
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Term of the Day - open-end fund
A fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Open-end funds raise money by selling shares of the fund to the public, much like any other type of company which can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most open-end funds, shareholders are free to sell their shares at any time, although the price of a share in an open-end fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of open-end funds include diversification and professional money management. Open-end funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. also called mutual fund.
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Describes some of the terminology necessary to understand mutual fund investments, including open-end, closed-end, net asset value, public offering price, dividends and capital gains distributions, family, share classes, and dual-purpose fund.
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Quote of the Day
If a little money does not go out, great money will not come in. - Confucius (551BC - 479BC) philosopher
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