Classification of Mutual Funds in India is done on the basis of their objective and structure. Classification of Mutual Funds in India has helped to categorize them into major types such as Funds of Funds, Regional Mutual Funds, Closed-End Funds, Large Cap Funds, and Interval Funds.
Open-ended schemes are those which do not have a fixed maturity period.
You can enter into or exit from the scheme at any time.
Buying and selling of units are related to the Net Asset Value (NAV).
Thus, open-ended schemes offer liquidity, and this is one of the key benefits
Close Ended Schemes are those that have stipulated maturity periods (ranging from 2 to 15 years).
You can invest directly in the scheme at the time of the initial issue and thereafter you can buy or sell the units of the scheme on the stock exchanges where they are listed.
The market price of the units could vary from the NAV of the scheme on account of demand and supply situations, investors expectations and other market factors.
One of the characteristics of close-ended mutual fund schemes is that they generally trade at discounts to the NAV; but closer to maturity the discount narrows.