What is the structure of most mutual funds?

Most mutual funds are structured as open-end trusts, which distinguishes them from other funding structures. This open-end structure enables investors to buy and sell shares directly with the fund, meaning that the number of shares can fluctuate as investors enter and exit the fund.

Open-end trusts provide the benefit of liquidity, allowing investors to redeem their shares at any time based on the fund's current net asset value (NAV). This means that when you invest in an open-end mutual fund, the fund is legally obligated to buy back your shares at the current NAV upon request, which is typically calculated at the end of each trading day.

On the other hand, closed-end trusts, while they are another type of investment vehicle, do not offer the same liquidity as open-end funds. Shares of closed-end funds are traded on the stock exchange and can be bought or sold at market prices that may vary from NAV.

Publicly traded companies and private limited partnerships represent different legal structures entirely. Publicly traded companies are equity securities that can engage in various business activities, while private limited partnerships involve a set of private investors and are not publicly traded. Thus, these structures do not align with the common format used by mutual funds.

Overall, the open-end trust structure is