Closed-end fund

A closed-end fund (CEF) is organized as a publicly traded investment company. Like a mutual fund, a closed-end fund is a pooled investment fund with a manager overseeing the portfolio; it raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

Generally, these products use funds raised through a public offering to invest in a portfolio of securities which may be actively or passively managed. The objective of most funds is to create an income stream for investors from dividends, capital gains, interest payments or capital appreciations from underlying investments. These funds employ various investment management tools from leverage to derivative investment strategies to enhance the returns of the fund or for capital protection. These funds are not related to or hold a significant position in any single business.

Distinguishing features
A closed-end fund differs from an open-end mutual fund in that:
 * It is closed to new capital after it begins operating.
 * Its shares (typically) trade on stock exchanges rather than being redeemed directly by the fund.
 * Its shares can therefore be traded at any time during market opening hours. An open-end fund can usually be traded only at a time of day specified by the managers, and the dealing price will usually not be known in advance.
 * It usually trades at a premium or discount to its net asset value. An open-end fund trades at its net asset value (to which sales charges may be added; and adjustments may be made for e.g. the frictional costs of purchasing or selling the underlying investments).