Types of close-ended mutual funds
- Fixed maturity plans
FMPs invests the corpus in debt instruments which mature in line with the fund's maturity date. This helps them reduce interest rate risks and is deal for investors whose investment horizon matches with fund's maturity.
- Capital protection fund
Capital protection funds invest in both equity and debt. Debt portion is invested in fixed income securities (bonds). Equity portion consists of equity (stocks) and equity-related instruments. Debt portfolio protects the capital while equity generates capital appreciation
Features of close-ended mutual funds
- Fixed maturity date
- Traded on stock exchange
- Projected against daily market ups and downs
Benefits of close-ended mutual funds
- Stability for fund managers
- Demand and supply based pricing
- Two potential ways to make money
- Idea for lumpsum investment
Mutual fund calculator
- Investment type
- Scheme based
- SIP
- Lumpsum
Invested Amount
₹25,000
Estimated Returns
₹19,059
76%
Returns
Total of your investment will be
₹44,059
Top performing mutual funds
Taxation of close-ended mutual funds
| Type of close-ended fund | Holding period | Capital Gains | Options |
|---|---|---|---|
| Equity-oriented (more than 65% investment in equities) | Less than 12 months | Short term capital gains (STCG) | 15% |
| More than 12 months | Long term capital gains (LTCG) | 10% - on gains exceeding ₹1 lakh in a financial year Nil – If gains are less than ₹1 lakh in a financial year | |
| Debt Oriented | Less than 36 months | Short term capital gains (STCG) | As per income tax slab |
| More than 36 months | Long term capital gains (LTCG) | 20% post indexation |
FAQs
What is a Close Ended Mutual Fund?
When a fund house introduces a new scheme with a fixed number of units, such funds are known as close ended mutual funds. These funds are launched through an NFO (New Fund Offer) and later traded like stocks. They have a fixed maturity date, making them ideal for investors with financial goals matching the fund’s maturity tenure. Also, since close ended funds do not facilitate systematic investment plan, they are ideal for investors with ready access to lumpsum capital.