Closedend

Closed-end, or closed-end fund, is a type of investment fund that raises capital through an initial public offering by issuing a fixed number of shares and then lists those shares on a stock exchange. Unlike open-end funds, closed-end funds do not continuously issue or redeem shares in response to investor flows, so the total share count remains fixed.

Shares trade on an exchange at prices set by supply and demand, which can be above or below the fund’s net asset value (NAV). NAV reflects the market value of the fund’s underlying holdings; investors may experience a discount or premium relative to NAV.

Most closed-end funds are actively managed, though some are index-based. The fund’s portfolio is updated through periodic rebalancing, but the share count does not change except during occasional secondary offerings or tender offers. Some funds use leverage, borrowing to invest more, which can magnify both gains and losses.

Distributions are common and are paid monthly or quarterly, drawn from income, realized gains, and occasionally return of capital. Fees typically include a management fee and operating expenses, and some funds charge selling commissions.

Advantages include professional management, potential trading discounts to NAV, and the ability to employ leverage or invest in illiquid assets. Risks include price volatility driven by market sentiment, the possibility of persistent discounts or premiums, liquidity risk, and higher fees relative to some alternative structures.

In the United States, closed-end funds are registered investment companies overseen by the Securities and Exchange Commission; similar funds exist in other markets under local regulatory regimes.