What are closed-ended funds/schemes in mutual funds?
Closed-ended mutual fund schemes are structured investment options that accept subscriptions only during a fixed period known as the New Fund Offer (NFO). These schemes have a predetermined maturity date—typically between 3 to 5 years—and do not allow fresh investments after the NFO period ends.
Once closed for subscription, units of these funds are listed on a stock exchange. Investors can buy or sell them in the secondary market, subject to availability and prevailing market prices.
Key features of closed-ended schemes
- Subscriptions accepted only during NFO period
- Fixed tenure (e.g., 3–5 years) with defined maturity date
- Listed on stock exchanges after NFO for limited liquidity
- Some funds allow repurchase at NAV-linked prices at periodic intervals
What if...
| Scenario | Explanation |
|---|
| You missed the NFO | You can still invest by purchasing units on the stock exchange, if available. |
| You want early redemption | Unless repurchase is allowed, early exit is only possible via exchange trading. |
| Fund is trading at a discount | Secondary market price may be below NAV, offering opportunity or risk. |
| You want SIP option | Closed-ended funds usually don’t support SIPs due to limited subscription window. |
Closed-ended schemes are ideal for investors who can stay invested for the full tenure and do not require high liquidity. They often suit goal-based investments with a defined timeline.
Last updated: 18 Jun 2025
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