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Chapter 11. Mutual Funds > Open-Ended Funds

Open-Ended Funds

Most mutual funds are open-ended funds. There is no set limit on the number of shares that can be issued and no limit on the amount of money put into the fund. A fund can sometimes get so big that it closes itself off to new investors; however, this is not a closed-end mutual fund but simply a fund that has chosen to limit the amount of money being invested. Over 97 percent of mutual funds are open-ended funds.

Key Point

Some open-ended mutual funds have had to close off the funds to new investors periodically if they don't have viable places to invest the money. Peter Lynch, legendary former manager of the Fidelity Magellan Fund, could create a huge effect on a company by buying or selling the stock as part of the Magellan Funds portfolio. Some funds have a history of opening and closing periodically to control the assets in the fund. Over the past several years, with assets going down in the mutual fund market based on the market losses, some funds with very attractive track records have reopened to new investors.



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