What is Open-Ended Fund?

An open-ended fund — sometimes used interchangeably with "evergreen fund" — allows investors to subscribe and redeem on an ongoing basis at the fund's prevailing unit price. Most retail-tier managed funds (KiwiSaver schemes, Booster, Fisher Funds retail) and many NZ wholesale credit / first-mortgage funds use this structure.

Mechanics: the fund publishes a unit price daily, weekly, monthly, or quarterly based on the asset valuation. Investors subscribe by sending cash and receiving units at the next pricing point. Redemptions follow the reverse — units extinguished, cash returned, subject to notice periods and any gating provisions.

Why NZ first-mortgage funds adopted this structure: first mortgages have natural liquidity from loan repayments — borrowers refinance, repay early, or hit maturity. Cash flowing back into the fund can be either redistributed to investors (as redemptions) or recycled into new loans. The open-ended structure accommodates both flows.

Redemption frequency and notice: open-ended funds offer redemptions at varying cadences. Monthly windows with 30-day notice are common in private credit (FMT, Hunter, Midlands). Quarterly windows with 60-90 day notice are common in property and credit (Pallas). At-exit-only is the most restrictive variant (Midlands wholesale per its IM gate provisions).

Gating provisions: most open-ended funds reserve the right to suspend or defer redemptions if liquidity is insufficient or if mass redemption would disadvantage remaining investors. Per the FMCA fair-dealing rules, these provisions must be disclosed in the IM or PDS and exercised only in genuine investor-protective circumstances.

Distinction from "evergreen": all evergreen funds are open-ended, but not all open-ended funds are evergreen — some open-ended structures have planned wind-down dates after a specified term.