What Is an Open End Fund?

By Lee Samaha – Updated Sep 6, 2025 at 3:24 PM

Key Points

Open-end funds allow continual share creation and redemption, aligning investment accessibility with market value.
NAV calculation for open-end funds happens daily based on total assets divided by shares issued.
Unlike closed-end funds, open-end funds can't trade on secondary markets and are priced solely by managers.

Open-end funds are the mainstay of the mutual fund industry and need to be understood by anyone interested in putting money to work in funds. They offer investors a relatively low-cost way to gain exposure to diversified holdings in an asset class. In addition, investors can put small amounts into the fund, making them ideal for people looking to invest incrementally over a long period. As such, they provide a helpful way for novice investors to enter the markets.

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What Is a Hedge Fund?

When wealthy investors put their money together to beat the market.

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Further considerations

While open-end funds offer novice investors a relatively safe way to invest, are liquid, and only require a small amount of investment, they have some downsides. They can come with relatively high fees and expenses, and many investors prefer to do their own research when stock picking.

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Liquidity

Liquidity is the extent to which an asset can be bought or sold quickly without affecting the asset's price. Here you will learn how the importance of liquidity and how to calculate it.

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About the Author

Lee Samaha is a contributing Stock Market Analyst at The Motley Fool covering industrials, electricals, energy, materials, transportation, and infrastructure stocks. Prior to The Motley Fool, Lee was a Civil Engineer and Investment Manager. He holds a Bachelor of Civil and Structural Engineering from Southampton University and a Certificate in Investment Management from Chartered Institute for Securities & Investment. Lee first cut his investing teeth on The Motley Fool bulletin boards (commonly referred to as the “Fool Boards,”) and he’s infinitely grateful to all of the investors he learned from in this powerful investing community.

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