A Study on Comparative Analysis of Open-Ended and Closed-Ended Mutual Funds in the Financial Service Industry

Abstract

Mutual funds have emerged as one of the most preferred investment avenues due to their ability to provide diversification, professional fund management, liquidity, and long-term wealth creation opportunities. Among the various categories of mutual funds, open-ended and closed-ended mutual funds differ significantly in terms of liquidity, investment flexibility, risk exposure, and return potential. The present study aims to compare the performance of selected open-ended and closed-ended mutual funds distributed through NJ Wealth Pvt. Ltd. over a five-year period from 2021 to 2025. The study is based on secondary data collected from the official websites of Asset Management Companies (AMCs), annual reports, and other reliable financial sources. The performance of three open-ended mutual funds and three closed-ended mutual funds was analysed using Annual Return, Standard Deviation, and Sharpe Ratio to evaluate their return, risk, and risk-adjusted performance. The findings reveal that the performance of both categories of mutual funds varied across the study period due to changing market conditions. Open-ended mutual funds demonstrated better liquidity, flexibility, and consistent investment opportunities, whereas closed-ended mutual funds generated superior risk-adjusted returns during certain years because of their stable investment corpus and long-term investment strategy. Among the selected schemes, SBI Tax Saver Fund exhibited the highest risk-adjusted performance in several years, while Nippon India Multi Cap Fund recorded strong annual returns during favourable market conditions. The analysis indicates that no single fund consistently outperformed the others across all performance measures. The study concludes that both open-ended and closed-ended mutual funds offer distinct advantages based on investors' financial objectives, investment horizon, risk tolerance, and liquidity requirements. It recommends that investors evaluate both return and risk before selecting mutual fund schemes and maintain a diversified portfolio comprising both fund categories to achieve balanced returns and long-term wealth creation.