What is the difference between an open-end fund and a closed-end fund?

In Texas, an open-end fund and a closed-end fund are both types of investment vehicles, but they have different features. An open-end fund (also known as a “mutual fund”) is a type of investment company that continuously offers its shares to the public. Its shares are continuously offered and sold on the open market. Any new investor can buy shares in the fund, and the fund will continue to issue new shares as needed to meet investor demand. In contrast, a closed-end fund (also known as a “CEF”) is a type of investment company that has a fixed number of shares and doesn’t issue or redeem new shares to the public. The initial offering of these shares takes place in the form of a public offering and these shares are traded on the open market. Because there is no ability to create new shares, the price of a closed-end fund is determined purely by supply and demand. An important distinction between the two types of funds is that an open-end fund is managed by a professional investor, while a closed-end fund is usually managed by the fund’s shareholders. As such, open-end funds tend to be more actively managed than closed-end funds. Additionally, closed-end funds often pay out higher dividends than open-end funds. Overall, the main differences between open-end and closed-end funds are the fact that open-end funds have an unlimited number of shares and are actively managed by a professional investor, while closed-end funds have a limited number of shares and are managed by shareholders.

What is the difference between an open-end fund and a closed-end fund?

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