Open-ended mutual funds, which by definition allow investors to exit at any point, are run by fund managers who keep higher levels of cash aside for redemptions.

While top close-ended equity
diversified funds have grossed (-) 44% in the one year, their top open-ended peers have given (-) 33% in the same time. As an investor, this means 10% of your money was saved if you chose an open-ended scheme.
 
Mutual fund industry analysts point out that fund managers in open-ended schemes keep 15-20% of assets in cash and cash related instruments to meet redemptions.

“One reason could be the optimal design for open funds,’’ Prateek Agrawal, head of equity at Bharti AXA Investment Managers, said. “Open-ended funds have to be prepared for both inflows and outflows.’’