Why do some closed-end mutual funds trade above or below their net asset values?

Mutual Funds
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November 2016
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Supply and demand. Closed-end funds have a fixed supply. When demand for these funds rises, the assets can trade at a premium (above their net asset value). When demand falls, the funds can trade at a discount (below their net asset value). There are some closed-end funds (CEFs) that always trade at a discount. Not all CEFs that trade at a discount are a good buy opportunity.

Open-end mutual funds (and ETFs) have a flexible supply. In this case, shares are created and redeemed to match demand. Open-end mutual funds can also trade above and below NAVs - but usually just for a very short period.

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