A closed-end fund is a collective investment scheme that has a fixed number of shares. Unlike open-end funds, new shares/units in a closed-end fund are not created by managers to meet demand from investors.

Some characteristics that distinguish a closed-end fund from an ordinary open-end mutual fund are that:

  1. it is closed to new capital after it begins operating, and
  2. its shares (typically) trade on stock exchanges rather than being redeemed directly by the fund.
  3. its shares can therefore be traded at any time during market opening hours. An open-end fund can usually be traded only at a time of day specified by the managers, and the dealing price will usually not be known in advance.
  4. it usually trades at a premium or discount to its net asset value. An open-end fund trades at its net asset value (to which sales charges may be added; and adjustments may be made for e.g. the frictional costs of purchasing or selling the underlying investments).
  5. in the United States, a closed-end company can own unlisted securities.

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