Closed-End Funds
Learn about the publicly traded mutual fund
A closed-end fund (CEF) is a publicly traded mutual fund that has similarities with its open-end counterpart. A closed-end fund collects money from investors through an initial public offering (IPO) and uses this money to invest in securities. The shares trade on secondary market exchanges like the American Stock Exchange (AMEX) and the New York Stock Exchange (NYSE).
CEFs are like open-end mutual funds in many respects. Both are investment companies that initially pool money from investors to buy securities. They offer the benefits of diversification and professional management. And an investor buys into a fund by purchasing shares of the fund.
However open-end mutual funds are continually offered for sale, while closed-end funds offer a limited number of shares. While mutual fund share prices are set at the net asset value (NAV), the price at which closed-end shares trade is called the market price, which may fluctuate based on supply and demand.
CEF is generally traded at a discount to their NAV. A CEF is not required to buy back its shares from investors upon request.
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