Mutual Funds, ETFs, and Fund Structure

The choice of fund structure determines who bears redemption risk, whether the price an investor pays reflects the underlying asset value, and how much of the gross return survives after taxes. A manager who generates genuine alpha can still deliver poor investor outcomes if the fund wrapper introduces a discount, high fees, or illiquid redemption terms. Understanding the mechanics of open-end funds, closed-end funds, and ETFs is therefore inseparable from interpreting the performance evidence: the same management team may look dramatically different depending on which structure delivers their strategy to investors.

1. The mutual fund universe: scale and composition
2. Open-end mutual funds
3. Closed-end funds
4. Exchange-traded funds (ETFs)
5. Choosing among vehicles: a summary