What is a closed-end fund?

An investment company manages a closed-end fund’s portfolio, and its shares actively trade on a stock exchange throughout the day. Unlike ETFs or mutual funds, outside investors buy and sell the shares of closed-end funds on the secondary market. The shares are not issued and repurchased by a closed-end fund’s management.

Are closed-end funds risky?

CEFs, like all investments, involve risk, including the possible loss of principal. What Is a Closed-End Fund? Closed-end funds (CEFs) are one of four main types of investment companies, along with mutual funds, exchange-traded funds (ETFs), and unit investment trusts (UITs).

What is the difference between closed-end and open-end funds?

Because they trade exclusively in the secondary markets, closed-end funds require a brokerage account to buy and sell. Open-end funds can usually be purchased directly through the fund's sponsoring investment company. Its pricing is one of the unique characteristics of a closed-end fund.