No SIP, tough midway exits and now LTCG tax take shine off Closed-end funds

Long-term investors should opt for an open-ended fund where they have to pay 10% LTCG tax only once when they are close to their goal

Closed-end funds have always been a less attractive investment category for investors than open-ended funds. The imposition of long-term capital gains tax of 10 per cent is set to make this category even more unattractive.

Closed-end funds are open for subscription to investors for a limited period at the time of their new fund offer (NFO). Unlike open-ended funds, investors can't enter them once this period gets over. In recent times, the number of closed-end funds being launched by fund houses has far exceeded the new fund launches of open-ended schemes.

When marketing closed-end schemes, fund houses highlight