What Are Closed-Ended Funds?
Closed-ended mutual fund schemes are a type of investment with a set maturity period, meaning the fund has a predetermined duration after which it will be closed. Investors can buy units of these funds only during the initial offer period when the fund is first launched. After this period, the units are no longer available for direct purchase from the fund.
Once the scheme is launched, closed-ended funds must be listed on a stock exchange, allowing investors to trade the units during the fund’s life. This means that even though you can’t buy or sell units directly from the fund once the initial offer ends, you can still buy and sell units in the secondary market, like the stock market.
However, it’s important to note that the liquidity of these funds on the stock exchange can often be quite limited. This means there may not always be enough buyers or sellers for the units, making it harder to sell your units quickly or at a desired price. So, while the listing on the exchange provides an option for trading, the ease of trading might not always be as smooth as it is for more liquid investments. Here are some examples of close-ended mutual funds:
| Fund Name | Type | Launch Date |
| SBI Long Term Advantage Fund- Series III | ELSS | 31-Mar-2016 |
| ICICI Prudential Long Term Wealth Enhancement Fund | Equity | 22-Mar-2018 |
| SBI Fixed Maturity Plan – Series 44 – 1855 Days | Debt | 02-Jun-2021 |
Given the mandatory listing and the complexities of managing closed-ended funds, seeking professional guidance is crucial. A mutual fund advisor or distributor can help you identify the most suitable schemes based on your investment goals and financial situation. They can assist in evaluating the risks and rewards of various funds, ensuring that your investment strategy is aligned with your long-term objectives. Additionally, an advisor can guide you through the entire investment process, helping you make informed decisions and maximize potential returns most efficiently. Expert support helps you easily handle these funds and reach your financial goals more effectively.
