Comparing Different Classes & Forms of Mutual Funds

Open End Fund

• Most common type of mutual fund

• No limit on outstanding shares issued

• Investors buy directly from the fund

• Price of mutual fund is based on the NAV, so the value of it is determined by the value of the underlying securities held by the mutual fund

Closed End Fund

• Fixed amount of shares outstanding

• Managed by a fund manager

• Shares are bought and traded on the open market like stocks

• Price is determined by supply and demand, so you may be able to buy shares at a discount or you may have to pay a premium

• Front end sales charges 

• Lower 12b-1 fees

• Available breakpoints

• Right of accumulation

• Not right for short term investors

• No front end fees

• No breakpoints

• Usually higher expense ratios compared to A & C shares

• Deferred sales charge: the longer you hold the shares the lower the sales charge

• Ideal for long term investors

• No front end fees

• Small back end load, typically 1%

• Moderate expense ratios, lower than B but higher than A shares