UK Accounting Glossary
A Closed-End fund is one with a limited number of shares. No new shares are issued after the fund is launched. An investor can purchase shares in a closed-end fund from a broker. The price of a closed-end fund is determined by the premium (or discount) placed on it by the market. ETFs, or exchange-traded funds, make up a subset of closed-end funds.
A closed-end fund is legally known as a closed-end management company. A closed-end fund issues a fixed number of shares, usually through a one-time public offering, after which timeshares in the closed-end fund are traded on a stock exchange, and not directly from the fund. A closed-end fund differs from a mutual (open-end) fund, which continuously issues new shares. A closed-end fund also differs from a mutual fund in that it may issue senior securities such as preferred stocks or bonds. The price of a share in a closed-end fund is determined entirely by the market and is not directly related to the NAV per share. Shares of a closed-end fund may sell at a discount or premium to the NAV. The process of buying or selling shares of a closed-end fund is identical to the purchase or sale of any other listed stock. Closed-end mutual funds are actively managed.
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This glossary post was last updated: 4th February 2020.