open-end and closed-end investment companies

There are two basic kinds of investment companies. Open-end companies-often called mutual funds-will buy back (redeem) their shares any time the customer wishes and sell open shares in any quantity demanded. Thus, the amount of their outstanding shares changes continually in response to public demand. The price of each open-end company share is equal to the net asset value of the fund-i.e., the difference between the value of its assets and its liabilities divided by the volume of shares issued.
Open-end companies may be either load or no-load funds. Load funds, which are in the majority, offer their shares to the public at net asset value plus a commission to brokers marketing all the shares. No-load funds sell their shares purely at net asset value. The investor must contact the no-load company himself, however. Whether load or no load, open-end investment companies are heavily invested in common stocks, with corporate bonds running a distant second.
Closed-end investment companies sell only a specific number of ownership shares. An investor wanting to acquire closed-end shares must find another investor who wishes to sell. The investment company does not take part in the transaction. In addition to selling equity shares, closed-end companies issue a variety of debt and equity securities to raise funds, including preferred stock, regular and convertible bonds, and stock warrants. In contrast, open-end companies rely almost exclusively on the sale of equity shares to the public to raise the funds they require