There is a difference in the way the fund manager determines the price of the investment fund. This has to do with how the investment fund can issue new participations. We distinguish between an open-end and a closed-end investment fund here.
In an open-end investment fund, the fund manager can continuously issue and take in new participations. As a result, the price of the investment fund reacts very little to supply and demand. The fund manager determines the price mainly on the basis of the value of the underlying investments and other assets of the investment fund. We call this value the intrinsic value. The chance of strong price fluctuations is therefore much smaller with an open-end investment fund than with a closed-end investment fund. Most investment funds in which you can invest with ABN AMRO are open-end investment funds.
In a closed-end investment fund, the total number of participations that the fund can issue is fixed. The price of the investment fund can therefore react strongly to supply and demand. For example, if many investors want to buy the investment fund, the demand is much greater than the supply. As a result, the price of the investment fund may rise sharply. If investors want to sell the investment fund en masse, the supply is much greater than the demand. And this in turn may lead to a sharply falling price. With a closed-end investment fund, there is a chance that you cannot buy or sell the investment fund at the time and at the price you want. This can be a disadvantage for you, especially in a negative market.