TECHNO MATERIAL

Once a fund starts to do well, the word gets out and it seems as if everyone wants to invest in it. A fund that continues to take on new investors’ money and keeps getting larger and larger is known as an open-end mutual fund. This means there’s no set limit as to how much money they’ll permit to be invested in the fund. At their discretion, the manager and others in authority may sometimes close the fund to new investors once they’ve taken in more money than they feel is manageable, but this is
decision they can make anytime, as they go along.
How Is an Open-End Fund Priced?
At the end of each day, the manager totals up the entire value of the portfolio that constitutes this mutual fund. He divides that total by how many shares are owned by the investors. This figure, whatever it comes out to, is called the net asset value, or NAV It is what each of your shares is worth. If you are a new investor and want to invest $1,000 into this mutual fund, and the NAV that day was $10 a share, you would own one hundred shares of the mutual fund. If the fund’s value goes up by $.25 a share, you will make $25. The more shares you have, the more you make, and the more you lose if the fund goes down.