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A CLOSER LOOK AT OPEN-ENDED FUNDS
Traditionally, an open-ended fund is a type of fund with no restrictions on the number of shares the fund can issue. If someone wants to invest in an open-ended fund, they will be able to, regardless of the number of investors who currently invest. Another way of looking at it is that open-ended funds refer to the method of capital raising used. As the fund manager of an open-ended fund, you raise capital continuously, and this capital is deployed throughout all other fund processes. When you come across a new investor, the fund assets simply increase. That means the capital amount and the number of shares both increase to make room for the new investor. When an investor decides to call it quits and cashes out — whether it is with all of their money or part of it — the shares will be sold back to the fund and canceled.
While this reduces the number of shares and the overall fund assets, it does not affect anyone else’s
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