Who can invest in open-ended mutual funds?

Open-ended schemes are highly popular among retail investors since they allow SIPs. Investors seeking high liquidity should opt for open-ended funds since they are open for purchase and redemption throughout the year. To further bi-furcate open ended funds, large cap funds are ideal for conservative investors whereas mid and small cap funds would be apt for aggressive investors with a long term investment horizon.

Is there a lock-in period for open-ended funds?

There is no lock-in period for open-ended schemes. Investors can enter and exit anytime. This helps them in various ways, such as Rupee Cost Averaging, starting small with just ₹100, avoid timing the market, all of which is not possible with close ended funds.

How is the value of units computed when you exit from an open-ended mutual fund scheme?

When you exit from an open-ended mutual fund, the value of your units is calculated based on the net asset value (NAV) of the scheme, on the day of redemption. Net asset value is calculated as total assets minus total liabilities divided by total number of units issued.

Is there an exit load for open-ended funds?

In open-ended mutual funds, there are exit loads (charges) if an investor exits the fund within a preset period, typically, one year in the case of equity funds. For short-term debt funds, the exit load period is typically less than 6 months whereas for liquid funds, the exit load period is 15 days to 30 days.

Invest in open-ended mutual funds anytime at 0% commission

Types of open-ended mutual funds

Equity mutual funds
Invest in stocks listed on the exchange and benefit from capital appreciation and dividend income. Equity funds can be large cap, mid cap, or small cap oriented.
Debt mutual funds
Benefit from fixed interest instruments like corporate bonds, government securities, non-convertible debentures etc. Debt funds can be short term, dynamic, and long term.
Hybrid mutual funds
A mix of equity and debt, hybrid funds provide both capital appreciation via equity and stable interest income through debt. They range from aggressive to conservative.

Features of open-ended mutual funds

No fixed maturity period
May have exit loads
SIP available

Benefits of open-ended mutual funds

Helps in diversification
Historical performance can be tracked

Low investment
High liquidity

Mutual fund calculator

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Top performing mutual funds

Scheme Name	5 Y
SBI Children's Fund - Investment Plan-Dir (G)	27.97%	Invest Now
ICICI Pru BHARAT 22 FOF - Direct (G)	27.81%	Invest Now
ICICI Pru BHARAT 22 FOF (G)	27.80%	Invest Now
ICICI Pru Infrastructure Fund - Direct (G)	27.36%	Invest Now

Taxation of open-ended mutual funds

Type of open-ended fund	Holding period	Capital Gains	Options
Equity-oriented	More than 12 months	Short term capital gains (STCG)	15%
Equity-oriented	More than 12 months	Long term capital gains (LTCG)	10% - on gains exceeding ₹1 lakh in a financial year Nil – If gains are less than ₹1 lakh in a financial year
Debt Oriented	Less than 36 months	Short term capital gains (STCG)	As per income tax slab
Debt Oriented	More than 36 months	Long term capital gains (LTCG)	20% post indexation

FAQs

Yes, since open ended funds are available for subscription throughout the year, you can start a systematic investment plan in an open-ended fund. This will provide multiple benefits – firstly, since you are investing via a systematic plan, you can start with as little as ₹100. Secondly, you can leverage the power of Rupee Cost Averaging which isn’t possible when you invest a lumpsum amount.