What are Interval Mutual Funds?
Interval Mutual Funds
Interval mutual funds combine the features of both open-ended and close-ended mutual fund schemes. They are largely close-ended but become open-ended at pre-specified intervals.
For instance, an interval scheme might become open-ended between
January 1 to 15, and July 1 to 15, each year. The benefit for investors is that, unlike in a purely close-ended scheme, they are not completely dependent on the stock exchange to be able to buy or sell units of the interval mutual funds.
However, between these intervals, the unis have to be compulsorily listed on stock exchanges to allow investors an exit route.
The periods when an intervals mutual funds scheme becomes open-ended are called ‘transaction periods‘;
The period between the close of a transaction period and the opening of the next transaction period is called ‘interval period‘.
The minimum duration of the transaction period is 2days, and minimum duration of interval period is 15 days.
No redemption/repurchase of units is allowed except during the specified transaction period (during which both subscription and redemption may be made to and from the scheme).
Learn About Open-Ended Mutual Funds & Close-Ended Mutual Funds
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services Pvt. Ltd. Where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.