What is an open ended mutual fund

• A mutual fund is a company that pools money from its investors and then invests the money in stocks, bonds, money markets or other types of securities that are outlined in the company's prospectus. Open-end mutual funds come in many different varieties and sizes. Some are riskier than others. There are also different fees, distributions and expenses applied to each fund.
  
  

Buying and Selling

• Investors can buy or redeem (sell) shares directly through the fund (unlike a closed-end fund). If an investor has an account at an investment firm, the transaction can be done there.
  
  

Advantages of Open-End Mutual Fund

• Open-end funds are more flexible and liquid than closed-end funds.
  Many funds allow the transfer or exchange among fund families without fees. Open-end funds allow for diversification and often less risk than owning one specific stock.
  
  

Risks

• As with any investment vehicle, there are risks. The price of the fund will fluctuate either up or down. Also, open-end funds may also be subject to sudden inflows or redemptions.
  
  

Advantage over Closed-End Fund

• Investing in a closed-end fund is appropriate for a more experienced investor. Closed-end funds can often be very volatile, and their value can greatly fluctuate. Shares can trade at a deep discount, and it can often be difficult to realize the true value of the shares. They are also not as liquid as open-end funds.
  
  

Do Your Homework

• Investing in any type of fund does involve some homework. Read the prospectus and check the fund's performance. Most closed-end funds are not trading instruments and are meant to be held for some period of time. Be careful not to buy or sell just before or after a dividend payment as you will be buying or selling the dividend. Prices can vary greatly during this time and tax consequences should be considered.
  
  

Check Your Trade Confirmations and Statement

• Look over those monthly or quarterly statements. Consider taking profits or cutting losses. Decide if it is prudent to stay with a particular fund or if it is time to move to a different one. Make sure your personal information is correct.