What Is an Open-End Mutual Fund?

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An open-end mutual fund is one in which any member of the public can buy shares from a broker-dealer on an open end basis. Find out why more money in an open-end mutual fund results in a lower asset value with help from a registered financial consultant in this free video on investments and personal finance.

Part of the Video Series: Beginner Investing
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Video Transcript

Mutual funds are forms of investment whereby an individual can participate in a mutual fund that will allow them to have interest in many companies. There are two types of mutual funds. One is a closed end mutual fund, which is more of a private offering to a limited amount of investors. This is a rarer form of mutual fund. The most common, of course, is an open end mutual fund, which means that any member of the public can come forward to a broker-dealer with dollars involved, and buy shares of that mutual fund on an open end basis. And therefore, the fund will grow accordingly. The more dollars that go into the fund, the lower the asset value becomes, and that's called the NAV, the net asset value. Open end funds are, by far, the most common form of mutual funds that are out there in the marketplace. But again, the investor has to be aware of the risk that's inherent in investing in mutual funds, be they closed or open. This is financial adviser Patrick Munro talking about open end mutual funds.

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