Closed end Fund

The term closed end fund is used for an investment scheme that is collective and in which the number of shares are fixed. Managers cannot create such funds for meeting the demand of investors. Instead, they can be sold and purchased only in the market. It is also known as closed end investment or closed end mutual fund. A closed end fund is not similar to a conventional mutual fund or an open end fund. Only the major global stock exchanges can trade closed end funds. A fund management company mainly sponsors closed end funds and they also have control over the process of its investment. Unlike an open fund, its shares can be traded at any time during the opening hours of the market. It is also traded at a discount or premium to the net asset value. There is fluctuating in the prices of stock of a closed end firm in accordance with the supply and demand forces of the market.

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Edited and Updated 31st May 2014

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