August 22, 2006 (LBO) – Sri Lanka’s long-suffering fund management industry is working with market regulators to promote closed-end funds and give an exit route to investors by listing units on the Colombo Stock Exchange, a senior official said Tuesday. In 2004, the Securities & Exchange Commission unveiled a new code for mutual funds which included issuing licenses for closed-end unit trusts.
A closed-end fund (also known as a closed mutual fund or closed-ended fund) has a stipulated maturity period and is open for subscription only during the specified period.
People can invest in the Fund at the time of the initial public issue and thereafter trade on the units they hold through the stock exchange, where the units are listed.
In the case of the present open-ended scheme, investors liaise directly with the mutual fund for investments and redemptions at the related net asset value (NAV) price.
But in the case of a closed-end scheme, the market price on the stock exchange could vary