1. 25 Investments: Introduction
  2. 25 Investments: American Depository Receipt (ADR)
  3. 25 Investments: Annuity
  4. 25 Investments: Art and Collectibles
  5. 25 Investments: Bonds
  6. 25 Investments: Cash
  7. 25 Investments: Closed-End Investment Fund
  8. 25 Investments: Common Stock
  9. 25 Investments: Convertible Bonds
  10. 25 Investments: Corporate Bond
  11. 25 Investments: Futures Contract
  12. 25 Investments: Life Insurance
  13. 25 Investments: The Money Market
  14. 25 Investments: Mortgage-Backed Securities
  15. 25 Investments: Municipal Bonds
  16. 25 Investments: Mutual Funds
  17. 25 Investments: Options (Stocks)
  18. 25 Investments: Exchange-Traded Funds
  19. 25 Investments: Preferred Stock
  20. 25 Investments: Private Equity
  21. 25 Investments: Real Estate & Property
  22. 25 Investments: Real Estate Investment Trusts (REITs)
  23. 25 Investments: U.S. Treasury Securities
  24. 25 Investments: Unit Investment Trusts (UITs)
  25. 25 Investments: Venture Capital
  26. 25 Investments: Zero-Coupon Securities
  27. 25 Investments: Conclusion

A closed-end fund is an investment fund that issues a fixed number of shares in an actively managed portfolio of securities. The shares are traded in the market just like stocks, but because closed-end funds represent a portfolio of securities they are very similar to a mutual fund. Unlike a mutual fund, the market price of the shares is determined by supply and demand and not by net asset value.

Closed-end funds are usually specialized in their investment focus. For example, one might concentrate its focus on a particular geographic region. They invest in stocks, bonds and other securities to gain a bit of diversification, but because they focus on one region or industry they are not diversified to the overall market. There are several hundred different closed-end funds actively traded on North American stock markets.

There are also "dual purpose" closed-end funds, which simply means that they have two classes of shareholders: preferred shareholders who receive mainly dividends as income, and common shareholders who profit from the capital appreciation of the fund's share price.

Objectives and Risks

Objectives can vary from fund to fund, so it is important to read the prospectus before investing. (To learn more, see Don't Forget To Read The Prospectus!) Some closed-end funds have capital appreciation as their primary concern, while others are more interested in income.

How to Buy or Sell It

Closed-end funds can be bought on various stock markets with the assistance of a full service or discount broker. There is no minimum number of shares to buy, and selling the funds is very easy and quick. When purchasing a closed-end fund, you are typically charged the usual brokerage commission as well as an annual management fee, usually under 1%.



  • These funds are easy to buy and sell on financial markets. Furthermore, they are regulated by the Securities and Exchange Commission.
  • The funds usually invest in hundreds of companies, so they offer good diversification in certain areas.
  • If bought in a tax-deferred account, closed-end funds are a great investment for long-term capital appreciation.



  • Fixed interest payments are taxed at the same rate as income.
  • The price of the closed-end fund is not exclusively linked to the performance of the securities held by the fund. The fund\'s share price depends on supply and demand in the open market.


Three Main Uses

  • Capital Appreciation
  • Income
  • Safe Tax Deferred Investment




25 Investments: Common Stock
Related Articles
  1. Financial Advisor

    Why You Should Consider These Closed-End Funds

    Advisors looking to recommend closed-end funds to clients might want to consider ones that have withstood the test of time. Here are a few examples.
  2. Investing

    An Introduction to Closed-End Mutual Funds

    If you're looking to generate income for your investments, consider closed-end mutual funds.
  3. Financial Advisor

    Using Closed-End Funds To Build Your Core At A Discount

    Closed-end funds offer portfolios a chance to buy assets at discounts to intrinsic values. This is most apparent in the blue-chip stock space.
  4. Investing

    The Difference Between ETFs and Closed-End Funds

    While ETFs and closed-end funds share similarities, they also have distinct differences.
  5. Retirement

    How to Retire with Just $500,000 Saved

    Here are three types of investments that can help generate a higher level of retirement income than Treasury securities without taking excessive risks.
  6. Investing

    A Brief History of the Mutual Fund

    This popular investment vehicle has seen its share of ups and downs, successes and scandals.
  7. Investing

    Closing Mutual Funds: Investment Protection Or Trap?

    Discover the characteristics of closing funds, the reasons why they close and key factors to consider.
  8. Financial Advisor

    Top 5 American Funds for Retirement Diversification in 2016

    Discover five mutual funds from industry leader American Funds with high yields that are perfect for retirement savings diversification.
Frequently Asked Questions
  1. Can stocks be traded on more than one exchange?

    A stock can trade on any exchange on which it is listed. If it chooses to do so, a company can list its shares on more than ...
  2. Treasury Bond vs Treasury Note vs Treasury Bill

    Understand the types of securities the government issues and learn the difference between Treasury notes (T-notes), Treasury ...
  3. MIS (Management Information System) vs. IT (Information Technology)

    Find out about the relationships and the primary differences and similarities between management information systems (MIS) ...
  4. What is a DRIP?

    The word "DRIP" is an acronym for dividend reinvestment plan, but "DRIP" also describes the way the plan works as investments ...
Trading Center