Types of Mutual Fund

There are two broad categories of Mutual Funds

Open-Ended – These schemes allow investors to buy or sell units at any point in time in the open market. They do not have a lock in period and the amount can be withdrawn any time, providing easy liquidity.

Closed-Ended – These schemes in India are known as NFO’s (New Fund Offer) and the units are offered at par Rs. 10 each. These funds have a lock in period of generally 3 years or more and the investors can invest only during the initial launch period, and no fresh investments can be made in the scheme. The money can be withdrawn only at the end of the lock in period. These funds are generally illiquid in nature and the investor cannot take the advantage of capital appreciation in the short term.