What is a closed-end investment?

A closed-end investment is overseen by an investment or fund manager and organized in the same fashion as a publicly traded company. This type of fund offers a fixed number of shares through an investment company, raising capital through an initial public offering (IPO). After the IPO, shares are listed on an exchange.

Are closed-end funds a good investment?

A closed-end fund issues shares only once. Closed-end funds also tend to use leverage, or borrowed money, to boost their returns to investors. That means higher potential rewards in good times and higher potential risks in bad times. What Is the Downside to Closed-End Funds?

What is a closed-end fund?

A closed-end fund holds an IPO at launch and the money raised from that IPO is used by portfolio managers to buy securities. Even though they have been traded in the US for over a century, closed-end funds (CEFs) are not well understood. A common misunderstanding is that a CEF is a type of traditional mutual fund or an exchange-traded fund (ETF).