Open ended management company can be defined as a company that issues and redeemed its securities that are issued on the behalf of this company. The most common type of example of an open ended management company is a mutual fund company that issues its shares and sells and redeems shares at the rate of net asset value per share that is issued by the mutual fund issuing company. Open ended management company is actually a true mutual fund issuing company only a fancy legal name of open ended management company is given to this kind of companies.
The major objective of the open ended management companies is to attract investors. Investors are attracted towards open ended management companies just to pool his or her money with different investors within the same company so that its investment can achieve the benefits of economies of scale and moreover he can enjoy a professional management of his funds or investment.
In an open ended investment company the availability of the shares is unlimited and any investor can buy shares according to its own requirement and own investment plan. However this thing is different from the closed ended investment companies that have a limited availability of shares. Moreover in closed ended investment companies the investor can buy his or her share in the open market according to the market price of the shares to the other investors instead of selling or funding back the open ended management company.
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