Closed End Fund (CEF)

This is a publicly traded investment fund that raises an initial amount of capital through an Initial Public Offering (IPO).  The listing on an exchange turns the fund into a publicly traded stock.  The company’s stock operates like any other corporation’s stock, from supply and demand perspective.  The investment company takes the money it acquired in the IPO and uses it to invest in a certain industry or market sector much like a mutual fund.  CEFs are different from mutual funds in that CEFs are not open to new investors money on a daily basis.  CEFs do not redeem or issue shares.  Investors in CEFs who wish to cash out must sell their shares to other investors.  The shares of a CEF are traded at prices that can differ from net asset value of the fund i.e. the market value of all the assets in the fund.

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