What is the difference between open-ended and closed-ended mutual funds?

Open-ended mutual funds allow investors to enter or exit at any time based on the fund’s NAV. Closed-ended mutual funds accept investments only during the NFO period and remain locked in until maturity, with limited exit options through stock exchange listing. Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.

Is it good to invest in close ended mutual funds?

Close ended mutual funds follow a fixed-tenure structure and offer limited liquidity. Whether this format fits an investor depends on their financial goals, investment horizon, and comfort with lock-ins. Disclaimer: : This information is for educational purposes only and should not be considered investment advice.

Are there any closed-end mutual funds?

Yes, some AMCs launch close ended funds, mostly in categories such as fixed maturity plans (FMPs), hybrid funds, and certain equity or debt funds strategies. Availability depends on current offerings from fund houses.

Is a closed-end fund good?

Closed-end funds have a structured tenure and operate with a fixed corpus. Their suitability varies based on an investor’s preferences, liquidity needs, and financial plans. Disclaimer: : This information is for educational purposes only and is not a recommendation.

Is SIP open ended or closed ended?

SIPs are generally available only in open-ended mutual funds because they allow continuous purchases. Close ended funds typically do not offer SIPs since they stop accepting fresh investments after the NFO period.

Do closed-end funds expire?

Yes, closed-end mutual funds come with a fixed maturity period, typically ranging from 3 to 5 years. Once the fund reaches maturity, it either gets liquidated and the proceeds are paid out to investors, or, in some cases, it may be converted into an open-ended fund, depending on the scheme's structure.

Which is better: open-ended or closed-ended mutual funds?

Open-ended and closed-ended funds work differently. Open-ended funds allow flexible entry and exit, while close ended funds operate with a fixed maturity and limited liquidity. The choice depends on an investor’s time horizon, liquidity needs, and comfort with each structure. Disclaimer: : This information is for educational purposes only and should not be treated as investment advice.

Can I redeem my investment in a close ended mutual fund before maturity?

No, close ended fund units cannot be redeemed before maturity. However, they can be sold on stock exchanges at market prices.

Are close ended funds suitable for long-term investment?

Close ended funds have a fixed maturity and remain locked in for the entire tenure. Whether this structure works for long-term plans depends on an investor’s financial goals, liquidity needs, and comfort with limited exit options. Disclaimer: This information is for educational purposes only and should not be considered investment advice.

Top Close Ended Mutual Funds – Best Funds, Benefits & Risks

Close-ended mutual funds are schemes where the fund house accepts investments only during a fixed initial period, usually through a New Fund Offer (NFO). After this window closes, you cannot add more money to the fund or redeem units until the fund reaches its pre-defined maturity, which may range from 3 to 7 years.

Top Close Ended Mutual Funds in 2025

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	NameMFs (11)↓	↓Sub CategorySub Category↓	↓PlanPlan↓	↓AUMAUM↓	↓NAVNAV↓	↓Time since inceptionTime since inception↓	↓Expense RatioExpense Ratio↓	↓Exit LoadExit Load↓	↓VolatilityVolatility↓
1.	SBI Dynamic Asset Allocation Active FoF SBI Dynamic Asset Allocation Active FoF	FoFs (Domestic) - Hybrid FoFs (Domestic) - Hybrid	Growth Growth	2,045.52 2,045.52	10.21 10.21	4.00 4.00	0.29 0.29	1.00 1.00	4.33 4.33
2.	HDFC Diversified Equity All Cap Active FOF HDFC Diversified Equity All Cap Active FOF	FoFs (Domestic) - Equity Oriented FoFs (Domestic) - Equity Oriented	Growth Growth	1,565.02 1,565.02	10.30 10.30	4.00 4.00	0.26 0.26	1.00 1.00	6.36 6.36
3.	Baroda BNP Paribas Business Conglomerates Fund Baroda BNP Paribas Business Conglomerates Fund	Thematic Fund Thematic Fund	Growth Growth	773.52 773.52	10.25 10.25	4.00 4.00	0.50 0.50	1.00 1.00	6.07 6.07
4.	Kotak CRISIL-IBX Financial Services 9 to 12 Months Debt Index Fund Kotak CRISIL-IBX Financial Services 9 to 12 Months Debt Index Fund	Index Funds - Debt Oriented Index Funds - Debt Oriented	Growth Growth	653.10 653.10	10.12 10.12	4.00 4.00	0.12 0.12	- -	0.34 0.34
5.	Axis CRISIL-IBX Financial Services 3-6 Months Debt Index Fund Axis CRISIL-IBX Financial Services 3-6 Months Debt Index Fund	Index Funds - Debt Oriented Index Funds - Debt Oriented	Growth Growth	335.52 335.52	10.12 10.12	4.00 4.00	0.10 0.10	- -	0.28 0.28
6.	Groww Multi Asset Allocation Fund Groww Multi Asset Allocation Fund	Multi Asset Allocation Fund Multi Asset Allocation Fund	Growth Growth	305.21 305.21	10.26 10.26	4.00 4.00	0.45 0.45	1.00 1.00	5.26 5.26
7.	Edelweiss Multi Asset Omni FoF Edelweiss Multi Asset Omni FoF	FoFs (Domestic) - Hybrid FoFs (Domestic) - Hybrid	Growth Growth	279.74 279.74	10.90 10.90	4.00 4.00	0.83 0.83	1.00 1.00	8.91 8.91
8.	Union Diversified Equity All Cap Active FOF Union Diversified Equity All Cap Active FOF	FoFs (Domestic) - Equity Oriented FoFs (Domestic) - Equity Oriented	Growth Growth	206.26 206.26	9.97 9.97	4.00 4.00	0.46 0.46	1.00 1.00	9.72 9.72
9.	Axis Nifty500 Quality 50 Index Fund Axis Nifty500 Quality 50 Index Fund	Index Fund Index Fund	Growth Growth	81.66 81.66	9.81 9.81	4.00 4.00	0.16 0.16	0.25 0.25	10.06 10.06
10.	Bandhan BSE India Sector Leaders Index Fund Bandhan BSE India Sector Leaders Index Fund	Index Fund Index Fund	Growth Growth	33.63 33.63	10.09 10.09	4.00 4.00	0.25 0.25	0.25 0.25	9.06 9.06
11.	Angel One Gold ETF FOF Angel One Gold ETF FOF	FoFs - Gold FoFs - Gold	Growth Growth	19.48 19.48	11.68 11.68	4.00 4.00	0.18 0.18	- -	23.44 23.44

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Disclaimer: Please note that the above table is for informational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Mutual Fund Screener and is subject to real-time updates.

Selection criteria: Plan: Growth | Filters: Time since inception; 3.00 to 5.00 | AUM: Sorted from Highest to Lowest

What are Close Ended Mutual Funds?

Close-ended mutual funds are schemes that accept money only during their launch period, called the New Fund Offer (NFO). Once this period ends, you cannot make new investments or redeem your units until the fund reaches its fixed maturity, which usually ranges from three to seven years. These funds are listed on stock exchanges, so you can buy or sell units there, but the price depends on market demand and may differ from the fund’s actual NAV.

Overview of the Top Close Ended Mutual Funds

Kotak Active Momentum Fund

Kotak Active Momentum Fund follows a rules-based momentum strategy. It selects stocks showing strong price trends and invests across large, mid and small caps. The fund aims to capture ongoing market momentum for potential long-term growth.

Bank of India Mid Cap Fund

Bank of India Mid Cap Fund focuses on mid-sized companies with growth potential. It invests mainly in mid-cap equities and aims to benefit from businesses that expand as they move up the market-cap ladder. Suitable for long-term horizons.

Mirae Asset Gold Silver Passive FoF

Mirae Asset Gold Silver Passive FoF gives exposure to both gold and silver by investing in underlying ETFs. It tracks domestic prices of these metals and offers a simple way to include precious metals for diversification.

360 ONE Multi Asset Allocation Fund

360 ONE Multi Asset Allocation Fund invests across equity, debt and commodities like gold and silver. Its diversified approach aims to balance growth, stability and risk in a single scheme through flexible allocation across multiple asset classes.

Capitalmind Flexi Cap Fund

Capitalmind Flexi Cap Fund invests dynamically across large, mid and small caps. It combines a quantitative model with active oversight to pick stocks across sectors. The fund aims to capture opportunities across the market for long-term growth.

Who Can Explore Close Ended Mutual Funds?

Comfortable With Lock-In

Closed-end funds remain locked for a fixed period, so investors who do not need regular access to their money and are fine staying invested until maturity may explore these funds.

Prefer Disciplined Investing

These funds limit frequent entry and exit, which helps investors avoid reacting to short-term market movements and encourages a steady, long-term approach.

Have Time-Bound Goals

The fixed maturity period aligns well with goals that have a clear timeline, such as education, a major purchase, or future milestones

Taxation of Close Ended Mutual Funds

<p>Tax on close-ended mutual funds works exactly like tax on open-ended funds of the same category. The tax depends on what the fund invests in, not on whether it is close ended or open-ended.</p>

Type of Fund	Short-Term Capital Gains (STCG)	Long-Term Capital Gains (LTCG)
Equity Mutual Funds	Less than 1 year → 20%	More than 1 year → Up to ₹1.25 lakh tax-free; above that 12.5%
Debt Mutual Funds	Within 3 years → Taxed as per income tax slab	More than 3 years → 12.5%
Hybrid – Equity-Oriented (>65% equity)	Less than 1 year → 20%	More than 1 year → Up to ₹1.25 lakh tax-free; above that 12.5%
Hybrid – Debt-Oriented (<65% equity)	Less than 3 years → Taxed as per income tax slab	More than 3 years → 12.5%

Types of Close Ended Mutual Funds

Equity Close Ended Funds

These funds invest mainly in shares of companies and aim to grow money over the long term. The fixed lock-in period gives fund managers the freedom to hold stocks without worrying about frequent redemptions. The performance depends on equity market movements, so returns can vary.

Debt Close Ended Funds

These funds invest in fixed-income securities such as government bonds, corporate bonds, and treasury bills. They are designed to provide more stable returns with lower price fluctuations compared to equity funds. The fixed tenure helps align the maturity of the underlying debt instruments with the fund’s duration.

Hybrid Close Ended Funds

These funds invest in a mix of equity and debt, offering a blend of growth potential and stability. The allocation between the two asset classes is defined by the scheme’s objective. The fixed maturity period allows the fund manager to follow a planned strategy throughout the tenure.

Fixed Maturity Plans (FMPs)

FMPs invest in debt instruments that mature around the same time as the fund itself. This structure helps reduce interest rate risk and provides better visibility on expected returns when held till maturity. Although the returns tend to be predictable, they are still subject to market and credit risks.

Features of Close Ended Mutual Funds

Fixed Tenure

Closed-ended funds come with a set maturity period, usually between three and five years. Once you invest, you cannot redeem your units before maturity unless you choose to sell them on the stock exchange.

NFO-Based Investment

These funds are open for investment only during the New Fund Offer (NFO). After the NFO closes, fresh purchases are not allowed, and units become available only for trading on exchanges.

Listed on Exchanges

Units are listed on recognised stock exchanges such as the NSE or BSE. This gives investors a way to buy or sell units before maturity, but the price depends on market demand and may differ from the fund’s NAV.

Stable Asset Base

Since no new money comes in after the NFO, and investors cannot redeem freely, the fund manager works with a fixed and stable corpus. This reduces redemption pressure and supports long-term decision-making.

Potential for Capital Appreciation

The lock-in period allows fund managers to invest in assets that may need time to deliver returns, which can help in capturing long-term growth opportunities.

NAV Disclosure

The fund’s Net Asset Value (NAV) is published regularly, helping investors track performance even though the investment is locked in for a fixed period.

Benefits of Investing in Close Ended Mutual Funds

Stability

Close ended funds can be redeemed only after the maturity period ends, which gives fund managers a stable pool of money to work with. Since investors cannot withdraw frequently, the fund manager does not have to worry about sudden redemptions or maintaining extra liquidity. This stability allows them to follow their investment strategy more confidently over the full tenure.

Market Driven Pricing

The units of a close ended fund trade on the stock exchange, where the price is influenced by demand and supply. If more investors want to buy the units and the available supply is limited, the market price can go higher than the fund’s NAV. This creates an opportunity for investors to potentially benefit from price movements in the market, similar to how stock prices fluctuate.

Liquidity and Flexible Exit Options

Some close ended funds provide a repurchase facility where investors can sell their units back to the fund house at NAV-linked prices during specific windows. SEBI rules ensure that fund houses must offer at least one exit route, either repurchase at intervals or listing on stock exchanges. This gives investors some flexibility to exit before maturity if needed, depending on the scheme’s structure.

Risks of Investing in Close Ended Mutual Funds

Lackluster Performance

The returns are not comparable to an open-ended fund. While the fund gets listed on the stock market soon after the NFO, should you require money in the short term, the buyers are so few that you may end up paying a premium over the purchase price, which fails the point of investing at all.

Lumpsum Investment Amount

Some close ended funds require you to invest a lump sum at the time of their launch. This can be a risky decision regarding your investments. This exposes you to bigger bets than otherwise warranted. Moreover, a huge section of the salaried class of investors is not comfortable with lump sum investments in terms of affordability and risk.

Lack of Historical Data

When it comes to open-ended funds, investors can review the performance of the funds over different market cycles because of the availability of historical data. However, in the case of clos ended funds, the historical record is unavailable.

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Factors to Consider Before Investing in Close Ended Mutual Funds

Lock-In Period

Close ended mutual funds remain locked until maturity, usually for three to seven years. Investors must determine whether they are comfortable holding their investments for the entire duration.

Limited Liquidity

Since units cannot be redeemed freely, exit options are restricted to stock exchange trading or periodic repurchase windows. Liquidity depends on market demand, which may affect the exit price.

Market-Linked Pricing

Units listed on the stock exchange may trade at a premium or discount to the NAV. Investors should understand that the market price may not always reflect the fund’s actual value.

Investment Horizon

The fixed maturity makes these funds suitable only when investors have a clear time frame that aligns with the fund’s tenure.

Portfolio Strategy

Close ended funds give fund managers a stable pool of money, allowing them to follow a consistent strategy. Investors can review the fund’s objective, asset allocation, and past track record of the AMC.

Cost Structure

Expense ratios and other costs vary across schemes. Understanding these charges helps investors know how much of their investment goes toward management and operations.

Conclusion

Close-ended mutual funds offer a fixed investment period and a stable pool of capital for the fund manager, which can help maintain a consistent strategy. These funds usually require a lump-sum investment and cannot be redeemed until maturity, except through limited exit routes such as exchange trading. While they may not offer the same level of flexibility as open-ended funds, they follow a structured approach with defined timelines. Investors can review the fund’s terms, risks, and features to understand whether this format fits their financial planning needs.

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Frequently Asked Questions About Close Ended Mutual Funds

What is the difference between open-ended and closed-ended mutual funds?
Open-ended mutual funds allow investors to enter or exit at any time based on the fund’s NAV. Closed-ended mutual funds accept investments only during the NFO period and remain locked in until maturity, with limited exit options through stock exchange listing. Disclaimer: Please note that this is not a recommendation. Please do your own research or consult your financial advisor before investing.
Is it good to invest in close ended mutual funds?
Close ended mutual funds follow a fixed-tenure structure and offer limited liquidity. Whether this format fits an investor depends on their financial goals, investment horizon, and comfort with lock-ins.
Disclaimer:: This information is for educational purposes only and should not be considered investment advice.
Are there any closed-end mutual funds?
Yes, some AMCs launch close ended funds, mostly in categories such as fixed maturity plans (FMPs), hybrid funds, and certain equity or debt funds strategies. Availability depends on current offerings from fund houses.
Is a closed-end fund good?
Closed-end funds have a structured tenure and operate with a fixed corpus. Their suitability varies based on an investor’s preferences, liquidity needs, and financial plans.
Disclaimer:: This information is for educational purposes only and is not a recommendation.
Is SIP open ended or closed ended?
SIPs are generally available only in open-ended mutual funds because they allow continuous purchases. Close ended funds typically do not offer SIPs since they stop accepting fresh investments after the NFO period.
Do closed-end funds expire?
Yes, closed-end mutual funds come with a fixed maturity period, typically ranging from 3 to 5 years. Once the fund reaches maturity, it either gets liquidated and the proceeds are paid out to investors, or, in some cases, it may be converted into an open-ended fund, depending on the scheme's structure.
Which is better: open-ended or closed-ended mutual funds?
Open-ended and closed-ended funds work differently. Open-ended funds allow flexible entry and exit, while close ended funds operate with a fixed maturity and limited liquidity. The choice depends on an investor’s time horizon, liquidity needs, and comfort with each structure.
Disclaimer:: This information is for educational purposes only and should not be treated as investment advice.
Can I redeem my investment in a close ended mutual fund before maturity?
No, close ended fund units cannot be redeemed before maturity. However, they can be sold on stock exchanges at market prices.
Are close ended funds suitable for long-term investment?
Close ended funds have a fixed maturity and remain locked in for the entire tenure. Whether this structure works for long-term plans depends on an investor’s financial goals, liquidity needs, and comfort with limited exit options.
Disclaimer: This information is for educational purposes only and should not be considered investment advice.

Disclaimer: This article is for informational purposes only. The content of the article including securities/investment products mentioned if any, should not in any manner be construed as an investment advice, recommendation, offer, solicitation to buy/hold/sell any securities/investment products. The securities quoted if any, are for illustration only and are not recommendatory. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Please consult a SEBI-registered financial advisor before investing.