Open End Funds vs Closed End Funds

Closed End Funds

Investment companies that issue a fixed number of shares via an initial public offering, which then trade on secondary markets based on supply and demand.

Trades Daily on Stock Market

Example: Municipal Bond Funds, High-Yield Income Funds

PIMCO Corporate & Income Opportunity Fund (PTY)

Open End Funds

Investment companies offering continuous primary offerings of redeemable shares, priced daily at the close of trading based on Net Asset Value.

Does not trade on Stock Market. You buy and sell directly with the fund.

Price is based on the NAV (processed at end of each day)

Example: Mutual Funds, Index Funds, ETFs

Vanguard 500 Index Fund (VFIAX)

*The Investment Company Act of 1940, granted ETFs a special exemption to trade daily on stock market.

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