Closed-End Funds

Structure & Management

Closed-end funds are actively managed and generally designed to provide a steady stream of distributions that pays out monthly or quarterly. Closed-end funds sell a fixed number of shares to investors during an initial public offering (IPO). This differs from open-ended mutual funds which continually offer shares to investors. Since the issuance of new shares is closed to investors after the IPO, trading occurs on an exchange like the NASDAQ or NYSE, and investors can buy and sell shares of a fund as they would stocks.


Closed-end funds can present unique investing opportunities across a number of asset classes and sectors.


Because of their fixed number of shares, the demand for a particular closed-end fund may be greater or less than the actual value of the securities it owns, causing it to trade at a premium or discount to its net asset value (NAV). Discounted CEFs can present strategic buying opportunities for investors looking to generate cash flow generation.

Convenience & Accessibility

CEFs’ ability to use leverage sometimes increases their risk or volatility. Accompanying this potential risk is their ability offer shareholders greater distributions than traditional income investments.


CEFs can encounter liquidity issues at both the fund and shareholder level.

Types of CEFs

  • Bond Funds
  • Equity Funds
  • Alternative Investment Funds