South Florida Arbitration & Litigation Lawyer Blog
Closed-End Fund:
The purpose of this post is to provide the reader with a description of the investment phrase “Closed-End Fund.” Please keep in mind that this post is being provided for educational purposes only. Consequently, it is not designed to be complete in all material respects. Thus, it is should not be relied upon as legal or investment advice. If the reader has any questions relative to this post, please contact a qualified professional.
A closed-end fund is a type of fund that has a fixed number of shares usually listed on a major stock exchange. Unlike open-end mutual funds, closed end funds do not stand ready to issue and redeem shares on a continuous basis. Usually, they tend to have specialized portfolios of stocks, bonds, convertibles or combinations thereof, and may be oriented toward income, capital gains, or a combination of these objectives.
Because the managers of closed-end funds are perceived to be less responsive to profit opportunities than open-end fund managers, who must attract and retain shareholders, closed-end fund shares often sell at a discount from net asset value.
Please keep in mind that these types of investment are offered by prospectus. Consequently, before investing, you should read and make sure that you understand the potential risks and rewards associated therewith.
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