Closed-End Fund

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DEFINITION of 'Closed-End Fund'

A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

Also known as a "closed-end investment" or "closed-end mutual fund."

INVESTOPEDIA EXPLAINS 'Closed-End Fund'

Despite the name similarities, a closed-end fund has little in common with a conventional mutual fund, which is technically known as an open-end fund.

The former raises a prescribed amount of capital only once through an IPO by issuing a fixed number of shares, which are purchased by investors in the closed-end fund as stock. Unlike regular stocks, closed-end fund stock represents an interest in a specialized portfolio of securities that is actively managed by an investment advisor and which typically concentrates on a specific industry, geographic market, or sector. The stock prices of a closed-end fund fluctuate according to market forces (supply and demand) as well as the changing values of the securities in the fund's holdings.

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    The primary differences between closed-end funds and open-end funds lie in how they are structured and how they are bought ... Read Full Answer >>
  3. How do I purchase shares of a closed-end investment?

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  4. What is the difference between a closed end investment fund (CEF) and a unit investment ...

    Although closed-end funds, or CEFs, and unit investment trusts, or UITs, have a lot in common in how they are structured, ... Read Full Answer >>
  5. Are closed end investments actively or passively managed?

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  6. What was the first mutual fund?

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

    Intuition tells us that a mutual fund's net asset value (NAV) (the net value of all assets within the mutual fund's portfolio ... Read Full Answer >>
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