Open-end fund.

In plain English

An open-end fund is the standard mutual-fund and ETF structure: it can create new shares when people invest and redeem shares when they cash out, so the number of shares floats with demand. Because shares are issued and redeemed at net asset value, the per-share worth of the holdings, an open-end mutual fund's price always equals its NAV, with no premium or discount like a closed-end fund. This is why most everyday funds are open-end: your money buys in and cashes out at the value of the underlying assets. Traditional mutual funds price once a day, after the market closes.

01Why it matters

Open-end is the structure behind almost every fund most people own, so knowing it prices at the value of its holdings explains why a mutual fund has no discount to hunt for.

02The math, step by step

You invest 1,000 dollars in an open-end index mutual fund. The fund creates new shares for you at its net asset value that day, so you pay exactly the per-share value of the underlying holdings, no premium or discount.

03What this is NOT

04Receipts

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