Closed-End Fund
A fund with a fixed number of shares that trades on an exchange.
What is Closed-End Fund?
Raises capital once through an IPO, then shares trade between investors on an exchange at market prices that can sit at a premium or discount to NAV. The fund does not redeem shares. Closed-end funds may use leverage and can hold less liquid assets, since they never face redemptions.
Closed-End Fund: a worked example
A closed-end muni fund with a $15 NAV trading at $13.50 - a 10% discount.
What is the difference between Closed-End Fund and Mutual Fund?
Open-end (mutual) funds issue and redeem shares continuously at NAV. Closed-end funds have fixed shares that trade at market prices, above or below NAV.
Often confused with Mutual Fund - see Closed-End Fund vs Mutual Fund side by side.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.