The open-end aspect of mutual funds is ________; that is, investors invest funds directly in or withdraw funds from the mutual fund. The open-end aspect of ETFs is ________ in that the investors buy the ETF in a closed-end manner like closed-end funds and then the authorized participant ________ between the ETF and the underlying portfolio, providing the indirect open-end aspect of the ETF.

Question

Quizplus · Accepted Answer

The open-end aspect of mutual funds is direct, meaning investors can directly invest in or withdraw funds from the mutual fund. For ETFs, the open-end aspect is indirect because investors buy and sell ETF shares in the market like closed-end funds. However, authorized participants can arbitrage between the ETF and the underlying assets, providing an indirect open-end mechanism.

The Open-End Aspect of Mutual Funds Is ________; That Is