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From Wikipedia, I learned that close-end funds and ETFs are traded over exchanges, and open-end funds are not. I wonder where open-end funds are traded? Thanks!

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I assume that mutual funds are being discussed here.

As Bryce says, open-ended funds are bought from the mutual fund company and redeemed from the fund company. Except in very rare circumstances, they exist only as bits in the fund company's computers and not as share certificates (whether paper or electronic) that can be delivered from the selling broker to the buying broker on a stock exchange. Effectively, the fund company is the sole market maker: if you want to buy, ask the fund company at what price it will sell them to you (and it will tell you the answer only after 4 pm that day when a sale at that price is no longer possible unless you committed to buy, say, 100 shares and authorized the fund company to withdraw the correct amount from your bank account or other liquid asset after the price was known). Ditto if you want to sell: the mutual fund company will tell you what price it will give you only after 4 pm that day and you cannot sell at that price unless you had committed to accept whatever the company was going to give you for your shares (or had said "Send me $1000 and sell as many shares of mine as are needed to give me proceeds of $1000 cash.")

  • The fund company is effectively the sole market maker, but note that there is no bid-ask price spread; both buys and sells are executed at a single price, the net asset value. – mgkrebbs Jun 28 '12 at 22:45
  • Yes, that's why I pointed out the difference that you don't get to know the exact price until the market closes and the net asset value is determined by the closing price. And for load funds, there is a difference between what you get to buy at and what you get to sell at. – Dilip Sarwate Jun 29 '12 at 0:19
  • @mgkrebbs are you sure thus us always the case ? in the UK I had some unit trusts that had different sell and buy prices – Pepone Feb 18 '16 at 21:42
  • @Pepone - You're right that some funds and unit trusts are load funds, that is, they charge more to buy then they will give you when you sell (for the same net asset value). I've dealt exclusively with no-load funds for so long (which use the same price for both), that I didn't think to mention such unwanted sales charges exist on some funds. – mgkrebbs Feb 18 '16 at 21:52
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Close-end funds just means there's a fixed number of shares available, so if you want to buy some you must purchase from other existing owners, typically through an exchange.

Open-end funds mean the company providing the shares is still selling them, so you can buy them directly from the company. Some can also be traded on exchanges as well.

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