Questions & Answers: What is “a closed-end management investment company”?
Question by Prayer F: What is “a closed-end management investment company”?
Best answer:
Answer by Bill Hicks
These are essentially a mutual fund that has set number of shares that trade on the open market (they can have a premium or a discount from their real value). These funds have an objective as to their holdings and can have a wide range of goals appropriate for all risk horizons. Beware of their management fees remember you may incur brokerage trading costs. Good luck
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B.Hichs’ information is correct, but just bear in mind that his source is an ETF information site. ETFs and Close-Ended Funds are actually two different beasts….very very similar but still different. If you are looking at investing in either of them over the traditional open-Ended funds, than I would love to just pat you on the back! I hate mutual funds! The alternative investments out there definitely are the new way for investors. In ’96 I saw a Brazilian ETF that no one talked about. 10 years later it had grown over 600% in it’s value. A performance never shared by a Mutual Fund. The only people left who like Mutual Funds are Financial Advisors (use to be one…) and that is only because they get a cut of the sales charges.
I believe that term “closed-end” tells you they have a set number of investments (or contracts) and a set number of shares that basically don’t change.
They may replace ones that end with new ones. But that is very different from a stock mutual fund where 50% or more of the companies they hold may be different from one year to the next.
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