investment company that sells mutual funds to the public. The term arises from the fact that the firm continually creates new shares on demand. Mutual fund shareholders buy the shares at Net Asset Value and can redeem them at any time at the prevailing market price.
investment company that sells mutual funds to the public. The term arises from the fact that the firm continually creates new shares on demand, although an open-end fund may close itself to new investors when its management decides that it is too large. Mutual fund shareholders buy the shares at Net Asset Value and can redeem them at any time at the prevailing market price, which may be higher or lower than the price at which the investor bought. The shareholder's funds are invested in stocks, bonds, or money market instruments, depending on the type of mutual fund company. The opposite of an open-end management company is a closed-end management company, which issues a limited number of shares, which are then traded on a stock exchange.
