what's a closed-end fund?
I'm thinking about investing, but need more info
- Anonymous1 decade agoFavorite Answer
A closed end fund is traded like a stock. You buy it and sell it through a stock broker during regular exchange hours. There are a limited number of shares outstanding. It may trade at above or below net asset value.
Here are two great sites for researching closed end funds.
- Anonymous1 decade ago
A CEF is a fund that can be a diverse or focused as any open-end or Mutual Fund, but trades on the NASDAQ, NYSE or AMEX at a market price instead of through the fund company at net asset value (NAV) the way a open-end or mutual fund is traded.
1. You have ineficiencies which cannot be found as easily in any other domestic investment.
2. You have more control over purchase and sales by using limit, stop, good-till-cancel orders during the trading day instead of a market order at the end of the day with open-end or mutual funds.
3. Less risk in volitile or low-volume areas of investment focus (like micro-cap stocks or the emerging markets)
4. Transparency of what the investment is worth (NAV) and what it can be purchased for (market price)
5. Levering you money by buying a CEF at a discount and selling for less of a discount or potentially a premium.
For more information, please visit: www.cefadvisors.com and read back issues of our Closed-End Fund Report.
John Cole Scott
Closed-End Fund Advisors, Inc.Source(s): Our company website, www.cefadvisors.com - I have worked at the firm for 6 years and travel the country giving educational presentations on CEFs. My father co-authored the most substantial book (500 pages)on CEFs, published by NY Institute of Finanice. I am also a Certified Fund Specialist (CFS).
- 1 decade ago