Closed-End Funds

Closed-End Funds

Closed End Funds (CEFs) are quite similar to ETFs except that they generally lack the provisions that drive the market prices of the closed end funds towards their net asset values. The funds are generally closed to new investors and do not provide investors with an option to redeem their existing shares with the investment company. As investors buy and sell closed-end funds in the market, the result can be that the closed end funds trade at market prices that persistently and substantially differ from their net asset values. CEFs are not as popular as ETFs and open-end funds, but many experts believe that CEFs can be attractive investment opportunities when they trade at large discounts from their net asset values. Investors need substantial investment knowledge to make informed decisions on whether or not the CEF is attractively priced

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