Open/closed-ended investment definition
In investments, the terms open-ended and closed-ended are used to designate whether a fund has an open or fixed number of shares in circulation.
A closed-ended investment has a fixed number of shares in circulation. As a result, demand and supply factors can mean that the price of the closed-ended investment varies from the value of its underlying assets (called net asset value, or NAV).
An open-ended investment, on the other hand, does not have a fixed number of shares in circulation. That means that there is less chance of supply and demand impacting its price.
Most exchange traded funds (ETFs) are open-ended investments, and thanks to authorised participants and intraday NAV calculations (INAV), an ETF is likely to trade very closely to the value of its underlying assets.