Closed-End Fund

A Closed-End Fund (CEF) is a type of investment fund and exchange-traded product that raises a fixed amount of Capital through an initial public offering (IPO) by issuing a set number of Shares. Unlike open-end funds, which issue and redeem Shares at the net Asset value (NAV), closed-end funds trade on Stock exchanges at market prices, which may differ from their NAV. The fund’s Shares are then bought and sold on the Secondary Market, and the fund’s total Assets remain fixed unless the fund issues additional Shares through a secondary offering.

Examples of Closed-End Funds include:

Cases of Closed-End Funds may involve trading at a premium or discount to NAV. For instance, during periods of high demand, a fund might trade at a premium, meaning its market price is higher than its NAV. Conversely, a fund may trade at a discount if investor sentiment is low or if the fund’s performance has been poor.