Open End Fund

A mutual fund, unit trust or open-ended investment company (OEIC), with no fixed amount of capital (i.e. is open ended), that raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. This means that the fund managers can issue new units and cancel old ones in accordance with the supply and demand of investors. The significance of this is that the price of units is not buffeted by market forces, but stays fairly closely aligned with the net asset value of the underlying assets of the fund. That contrasts with closed end funds, such as investment trusts, whose share prices do go up and down according to supply and demand, and which often trade below their net asset value.