Investor Education

What does open ended and close ended mean?

What does open ended and closed ended mean?

There are a number of listed and quoted products on the ASX and these products can either be open ended or closed ended. A closed ended product is one where the number of units or shares is fixed, meaning that because supply is limited investors have to trade with each other and therefore THEY set the price of the unit or share. An example of this is Listed Investment Companies and Listed Investment Trusts.

An open ended product, on the other hand, is one where new units are created in the fund as new investors buy in and if investors exit, then units are cancelled. The fund grows AND contracts based on investor activity plus investment returns. Because supply is not limited and investors can be transacting with the fund itself, the price of unit reflects the underlying value of the investments in the fund, not what the market thinks it is worth.

Magellan’s Active ETFs are open ended products and therefore the price that an investor pays is typically very close to the Net Asset Value.

Magellan’s Listed Investment Trust is a closed ended product and therefore the price an investor pays can be at a premium or a discount to the Net Asset Value.

For all of Magellan’s listed funds, we disclose the Net Asset Value every 15 seconds on our website using in intraday indicative NAV, which is called on iNAV, which investors can use to compare to the share price of each listed fund.

Important Information: Units in the fund(s) referred to herein are issued by Magellan Asset Management Limited ABN 31 120 593 946, AFS Licence No. 304 301 (‘Magellan’). This material is issued by Magellan and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision. A copy of the relevant PDS relating to a Magellan financial product or service may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au.

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