Open versus close

Closed-end mutual fund equity schemes have been the flavour of the season in the Indian market over the past two years. Sector players say such schemes have a fixed lock-in period and fund managers are able to manage these better, as they don't have to worry about redemption pressures. An analysis of the performance of closed-end and open-ended schemes shows the performance between these two hasn't been too divergent. Only three schemes from the closed-end basket have matched the returns offered by the top performing open-ended funds in the past year. Most closed-ended schemes have not been able to do as well as open-ended funds. Concerns remain that if the underlying stocks do not do well in one-two years, when many of the closed-end schemes will mature, close-end schemes might not be able to do justice with the locked-in funds of investors.