Open-End Mutual Funds

Open-End Mutual Funds

Open-end mutual funds are the most well-known type of mutual fund and are offered by many investment companies such as Vanguard, Fidelity, and T. Rowe Price. Investors purchase shares in open-end mutual funds directly from the investment company or through a broker. When an investor purchases shares in a fund the investment company creates new shares and uses the investment to purchase additional assets, generally leaving no effect on the fund’s net asset value. When an investor liquidates shares the fund’s investment company redeems those shares with cash, reducing the fund’s net assets and number of shares. In the case of no-load mutual funds, investment companies offer investors daily opportunities to purchase and redeem shares at the net asset value of each share.

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