Written by the Bini team · Last updated: October 2026
An open-end fund issues and redeems units continuously at prices linked to NAV and continues indefinitely. A closed-end fund has a fixed number of units that trade on the stock exchange and runs for a fixed term. Open-end is the global standard and the one BSEC is moving Bangladesh toward.
The difference at a glance
| Open-end fund | Closed-end fund | |
|---|---|---|
| Fund life | Continues indefinitely | Fixed term set in the trust deed |
| SIP availability | Available | Not available |
| Number of units | Changes as investors buy and redeem | Fixed after the initial offering |
| Where you buy | From Bini or from AMCs | On the stock exchange through a broker |
| Where you sell | Redeem on Bini or with AMCs | On the exchange, to another investor |
| Price you get | Based on NAV | Set by market demand |
| Can price differ from NAV? | Only by the fund's stated sale and repurchase terms | Yes, often significantly |
| Listed on DSE or CSE? | No | Yes |
The biggest difference is fund life. An open-end fund continues indefinitely so you can stay invested for as long as you like. A closed-end fund has a fixed term and ends at maturity.
Why open-end funds are the global standard
Open-end funds are the global standard for mutual funds. They have no end date and you can invest through a SIP. You can also exit at a price linked to NAV instead of depending on a buyer on the exchange.
Bangladesh is moving the same way. BSEC plans to eventually convert all closed-end funds to open-end funds.
How open-end funds work
When you invest, new units are created for you, whether you buy on Bini or from the AMC. When you want out, the AMC buys them back and cancels them. Because of this, the fund's size changes as investors come and go.
The prices are linked to NAV, with the fund's stated sale and repurchase terms applied. Check the fund's exit load and how long redemptions take. An exit load is a charge if you sell within a set period and we explain it in how mutual funds work.
How closed-end funds work
A closed-end fund raises money once and issues a fixed number of units. After that, the units are listed on the Dhaka Stock Exchange (DSE) (opens in a new tab) or Chittagong Stock Exchange (CSE) (opens in a new tab) and traded like shares.
You buy through a broker using your BO account. If you want to sell, you need a buyer on the exchange. The fund itself isn't obliged to buy your units back.
Closed-end funds won't stay closed-end forever. BSEC (opens in a new tab) plans to convert them all to open-end funds over time and issued an order on this topic on 7 May 2026. When a fund converts, investors can redeem units on Bini or with the AMC at NAV-based prices instead of relying on the exchange. Check BSEC's announcements for the funds you hold.
The discount to NAV, explained
Since a closed-end fund's price is set by buyers and sellers, it can drift away from its NAV.
| Amount | |
|---|---|
| NAV per unit | ৳ 12.00 |
| Market price on the exchange | ৳ 9.00 |
| Discount | (12 − 9) ÷ 12 = 25% |
In this example, you'd be paying ৳ 9 for ৳ 12 worth of underlying assets. It sounds like a bargain.
It might be. But a discount can also mean weak demand, poor trading volume or doubts about the fund. And it doesn't always close. You could buy at a 25% discount and watch it stay there.
Which one suits you?
Go for an open-end mutual fund. It is the global standard and it is the direction BSEC is moving Bangladesh's market in.
- You can invest monthly through a SIP
- There is no fixed end date so you can stay invested as long as you like
- Prices are linked to NAV instead of market demand
- You get a clear redemption process on Bini or with the AMC
Closed-end funds make sense only if you're comfortable trading on the exchange and understand discounts and trading volume. You also have to accept a fixed term and a fund that eventually ends.
To see how open-end funds actually work, from buying units to selling them, read how mutual funds work.
What to check before you buy an open-end fund
We cover the full checklist in Step 5 of how to invest in mutual funds in Bangladesh: The fund's objective, holdings, risk level, past performance, size, costs and minimum investment.
Choose an open-end fund and you can skip the checks that only matter for closed-end funds. These are the market price, the discount to NAV and what happens when the fund's term ends.
Frequently asked questions
What is the main difference between open-end and closed-end funds?
The biggest difference is fund life. An open-end fund continues indefinitely and issues and redeems units at NAV-linked prices through Bini or the AMC. A closed-end fund has a fixed term and a fixed number of units that trade on the stock exchange.
Why do closed-end funds trade below NAV?
Their price is set by supply and demand. Weak demand, low trading volume or doubts about the fund can push the price under NAV.
Are closed-end funds riskier?
They carry an extra layer of risk: The market price can move away from NAV and you may find it harder to sell at a fair price.
Can I invest in a closed-end fund through SIP?
No. SIPs are not available for closed-end funds. They are available for open-end funds.
Which is better for most investors, open-end or closed-end?
Open-end. It is the global standard and it has no fixed end date. It works with a SIP and prices follow NAV instead of market demand.
Will closed-end funds become open-end funds in Bangladesh?
That is the plan. BSEC intends to eventually convert all closed-end funds to open-end funds and issued an order on this topic on 7 May 2026.
How do I buy a closed-end fund?
Through a broker, using your BO account, in the same way you'd buy a share.