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Open-ended funds are available in most deveoloped countries, however terminology and operating rules vary. For example in the U.S. they are called Mutual Fund s, in the UK they are either Unit Trust s or OEIC s (Open-Ended Investment Companies) and in most of Europe they are SICAV s. DEFINITION An open-ended fund is equitably divided into shares (or units) which vary in price in direct proportion to the variation in value of the funds ''net asset value''. Each time money is invested new shares or units are created to match the prevailing share price; each time shares are redeemed the assets sold match the prevailing share price. In this way there is no supply or demand created for shares and they remain a direct reflection of the underlying assets. FEES There may be a percentage charge levied on purchase or sale of shares--in this case, the fund is a " Load Fund "; if there are no such charges levied, the fund is " No-load ". However, brokerages may charge commissions for the purchase of even no-load funds, and there may also be other fees associated with no-load funds, such as yearly Maintenance Fees in IRA accounts and Redemption Fees designed to discourage shareholders from jumping in and out of funds in an attempt at market timing. ACTIVELY MANAGED Most open-end funds are actively managed, meaning that a portfolio manager picks the securities to buy, although index funds are now growing in popularity. Index funds are open-end funds that attempt to replicate an index, such as the S&P 500, and therefore do not allow the manager to actively choose securities to buy. NET ASSET VALUE The price per share, or NAV ( Net Asset Value ), is calculated by dividing the fund's assets minus liabilities by the number of shares outstanding. This is usually calculated at the end of every trading day. EXAMPLES U.S. Mutual Fund s:
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