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Simple English definitions for legal terms
open-end fund
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A quick definition of open-end fund:
An open-end fund, also known as a mutual fund, is a type of investment company that pools money from many investors to buy a variety of securities, such as stocks and bonds. Unlike closed-end funds, an open-end fund continually offers new shares and buys back existing shares on demand. This means that the fund can grow as more investors invest in it. Investors in an open-end fund own a share of the fund and can benefit from the fund's gains or losses.
A more thorough explanation:
An open-end fund is a type of mutual fund that continuously offers new shares and buys back existing shares on demand. This means that the fund can grow as more investors buy shares, and shrink as investors sell their shares.
- Money-market fund: A mutual fund that invests in low-risk government securities and short-term notes.
- Value fund: A mutual fund that invests in stocks that its manager believes to be priced below their true market value.
- Global fund: A mutual fund that invests in stocks and bonds throughout the world, including the U.S.
These examples illustrate how open-end funds can invest in different types of securities and have different investment strategies. The key characteristic of an open-end fund is that it can continuously issue new shares and redeem existing shares, which allows investors to easily buy and sell their shares.