Closed End Investment Funds

Closed End Investment Company

Closed End Investment funds allow individuals to invest into a diversified portfolio of equities. What is a Closed End Fund? A Closed End Investment Company can be looked at as sort of a cross between a mutual fund and an ETF.

Like Mutual funds Closed End Investment companies will take your money and actively invest it into stock, bonds and other securities. Unlike mutual funds they trade on the open market and can be bought and sold just like stocks.

Regular Mutual Funds are priced based on their “Net Asset Value.” The price of one mutual fund share does not change unless it makes or loses money. These funds on the other hand trade based on supply and demand.

A closed end investment company’s share price can be higher or lower than the price of their net asset value. Therefore they can be trading above or below their net asset value at any given time.

Closed End Investment companies are also not required to buy back their shares. Instead your shares are traded on the open market and bought and sold to and from other investors.

Analyzing Closed End Funds

There are a couple different methods which investors can use to analyze a fund. First of all if the shares are trading below its net asset value it is considered to be trading at a discount. The cheaper the fund is trading compared to its assets the better deal it is for its investors.

Another thing investors can do is to read the Prospectus. The Prospectus is designed to tell investors everything they need to know about investing into the fund. It outlines the fund’s Objectives and strategies as well as the risks involved in the investment.

Expenses

Because they are bought on the open market you will have to pay brokerage fees for getting into them. In addition to that the mutual fund may come with its own management fees. It is a good idea to get an idea of the costs of the individual fund before joining it.

List of Closed End Funds

Now that you know a little bit about what they are you can find a list of funds by visiting this list of closed end funds page.

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