Closed-End Funds

Extracted Attributes

• Oldest Active CEF

  Foreign and Colonial Investment Trust (established 1868)

• Pricing Mechanism

  Market price determined by supply and demand, which may differ from Net Asset Value (NAV)

• Key Characteristics

  Fixed number of shares, non-redeemable, traded on secondary exchanges, ability to use leverage

• Legal Definition (US)

  Closed-end investment company under the Investment Company Act of 1940

• Primary Regulatory Body

  Securities and Exchange Commission (SEC)

Timeline

• The Foreign and Colonial Investment Trust is established in the United Kingdom, becoming the oldest closed-end fund still active today. (Source: Wikipedia)

  1868-01-01

• The Securities Act of 1933 is enacted in the United States, establishing registration requirements for publicly sold closed-end funds. (Source: Wikipedia)

  1933-05-27

• The Investment Company Act of 1940 is enacted in the United States, legally defining and regulating closed-end companies as one of three basic types of investment companies. (Source: Wikipedia)

  1940-08-22

Closed-end fund

A closed-end fund (CEF), also known as a closed-end mutual fund, is an investment vehicle fund that raises capital by issuing a fixed number of shares at its inception, and then invests that capital in financial assets such as stocks and bonds. After inception it is closed to new capital, although fund managers sometimes employ leverage. Investors can buy and sell the existing shares in secondary markets. CEFs are the oldest form of pooled investment still used, dating to the 1800s. The Foreign and Colonial Investment Trust was established in the United Kingdom in 1868 and as of 2013 was the oldest CEF still active and traded on the market (London Stock Exchange, under the symbol FCIT). In the United States, closed-end funds sold publicly must be registered under both the Securities Act of 1933 and the Investment Company Act of 1940. U.S.-based closed-end funds are referred to under the law as closed-end companies and form one of three SEC-recognized types of investment companies along with mutual funds and unit investment trusts. Like their better-known open-ended cousins, closed-end funds are usually sponsored by a fund management company. The fund's charter, prospectus and the applicable government regulations specify the types of investments the fund manager is permitted to buy. Some funds invest in stocks, others in bonds, and some in very specific assets (for instance, tax-exempt bonds issued by the state of Florida in the USA).

Web Search Results

• Closed-end Funds | Investor.gov

  # Closed-end Funds A closed-end fund, legally known as a closed-end investment company, is one of three basic types of investment companies. A closed-end fund invests the money it raises from investors, often in an initial public offering, in stocks, bonds, money market instruments and/or other securities. A closed-end fund generally is not required to buy its shares back from investors upon request. That is, closed-end fund shares generally are not redeemable. In addition, they may hold a greater percentage of less liquid securities in their investment portfolios than mutual funds and ETFs. [...] Closed-end funds are generally registered with the SEC and subject to SEC regulation. In addition, the investment portfolios of closed-end funds typically are managed by separate entities known as investment advisers that are also registered with the SEC. There are many varieties of closed-end funds, including interval funds and business development companies (BDCs). Each may have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses. Fees reduce returns on fund investments and are an important factor that investors should consider when buying shares.

• [PDF] A Guide to Closed-End Funds - Investment Company Institute

  a guide to Closed-End Funds A closed-end fund is a type of investment company whose shares are listed on a stock exchange or are traded in the over-the-counter market. [...] typically are listed on a stock exchange. Once issued, a closed-end fund’s common shares are not typically purchased or redeemed directly by the fund, but instead are bought and sold in the open market. The market price of closed-end fund shares fluctuates like that of other publicly traded securities. Closed-end funds invest in a wide variety of domestic and international securities, including common stocks, preferred stocks, high-yield bonds, municipal bonds, and corporate bonds. Features of Closed-End Funds A closed-end fund raises cash for investment by selling a fixed number of shares during an initial public offering (IPO), and the manager invests the cash in accordance with the fund’s investment objectives and policies. The fund does not issue redeemable securities and typically [...] The fund does not issue redeemable securities and typically does not offer its securities for sale on an ongoing basis. Because a closed-end fund does not need to maintain cash reserves or sell securities to meet redemptions, the fund has the flexibility to invest in less liquid portfolio securities. For example, a closed-end fund may invest in securities of very small companies, municipal bonds that are not widely traded, or securities traded in countries that do not have fully developed securities markets. Closed-end funds also have flexibility to borrow against their assets, allowing them to use leverage as part of their investment strategy.

• [PDF] Important Information about Closed-End Funds (including Interval ...

  is available to address your questions and discuss the features, characteristics, costs, and risks of any particular security under consideration for your account. Closed-end funds and unit investment trusts are unique investments and involve special risks. They may not be suitable for all clients. Characteristics of Closed-End Funds A closed-end fund is a type of investment fund or company that is registered under and subject to the requirements and limitations of the Investment Company Act of 1940 and also regulated by the Securities and Exchange Commission. Unlike mutual funds which continuously offer and redeem their shares on a daily basis at net asset value (NAV), closed-end funds typically raise money by selling a fixed number of shares of common stock in a single, one-time [...] Closed-end fund managers are therefore given a fixed capital structure in which to invest and do not have to deal with daily inflows and outflows of money. However, unlike unit investment trusts which do not make any changes to their initial portfolio of investments, closed-end funds can regularly buy and sell securities in their portfolios. After its public offering, a closed-end fund lists its common shares on a recognized stock exchange (such as the New York Stock Exchange or NASDAQ), the way an individual stock is, and closed-end fund shares then trade throughout the day at market prices that are based on supply and demand and other market forces. Investors seeking to buy or sell shares of a closed-end fund do so by placing their order with a broker-dealer who executes the order and [...] number of shares of common stock in a single, one-time offering, much the way a company issues stock in an initial public offering. Closed-end fund shares are also not redeemable, meaning that investors cannot require closed-end funds to buy back their shares. Closed-end fund shares instead are listed and traded on an exchange. After its shares are sold in the public offering, the closed-end fund uses the money to buy a portfolio of underlying securities and other investments, and any further growth in the size of the fund depends on the return on its investments rather than on the future sales of new shares. Investment advisors manage the investments of the closed-end fund subject to the oversight of the fund’s board of directors. Closed-end fund managers are therefore given a fixed

• Closed-End Funds Definition - CEF Connect - Brought to you by Nuveen Closed-End Funds

  # CEF Connect: The Authority on Closed-End Funds ## Brought to you by Nuveen Closed-End Funds Register now ### What is a Closed-End Fund? A closed-end fund is a publicly traded investment company that invests in a variety of securities, such as stocks and bonds. According to the fund's investment objectives, the fund raises capital primarily through an initial public offering (IPO). "Closed" refers to the fact that, once the capital is raised, there are typically no more shares available from the fund sponsor and the issuance of new shares is closed to investors. [...] After the IPO, most closed-end funds are listed on a national exchange such as the New York Stock Exchange (NYSE) or the NASDAQ. There the fund's shares are purchased and sold in transactions with other investors, not with the sponsor company itself. The typical closed-end fund strategy represents an actively managed selection of holdings. These investments in securities collectively add up to a value, known as its Net Asset Value (NAV), that may be different from the fund's market price. The market price is determined by market demand and supply, not the fund's net asset value. Since most closed-end funds offer regular monthly or quarterly distributions, demand is often related to both the distribution amount and the NAV performance of a fund. [...] Although the outstanding shares of a closed-end fund remain relatively constant, additional shares can be created through secondary offerings, rights offerings or the issuance of shares for dividend reinvestment. ###### Understanding Closed End Funds ###### View Nuveen Funds Important information: This site does not list all of the risks associated with each fund. Investors should contact a fund's sponsor for fund-specific risk information and/or contact a financial advisor before investing. Closed-end fund historical distribution sources have included net investment income, realized gains, and return of capital. For more detailed information on the distributions of a specific Fund, please visit the Fund sponsor's website.

• About Closed-End Funds | Guggenheim Investments

  Guggenheim Partners, LLC Guggenheim Partners, LLC # About Closed-End Funds A closed-end fund is a professionally managed investment company registered under the Investment Company Act of 1940 that invests in securities that it believes will help it achieve its investment objective, pursuant to the prospectus limitations. Historically, most closed-end funds specialize in either fixed-income or equity securities and follow a pre-determined investment objective, such as current income or capital appreciation. ## Guggenheim Investments' Unique Closed-End Funds Strategies Guggenheim Investments' Closed-End Funds offer access to several unique securities and strategies, including: ## How Closed-End Funds Work [...] ## How Closed-End Funds Work Closed-end funds raise their assets by issuing a fixed number of shares via an initial public offering ("IPO"). Closed-end fund shares are primarily traded on the New York Stock Exchange ("NYSE"), NASDAQ and the American Stock Exchange ("AMEX"). The proceeds from the IPO are invested in a portfolio of equity and/or fixed-income securities that intend to meet the fund's investment objective. The portfolio of securities is then professionally and actively managed by the fund's manager. [...] #### Exchange-Traded Liquidity Closed-end funds are typically listed on a major exchange such as the NYSE, NASDAQ and AMEX. An exchange listing provides investors with the benefits of intra-day liquidity and the ability to track the investment intra-day. Unlike mutual funds, closed-end funds allow an investor to obtain an intra-day price quotation, purchase or sell shares throughout the trading day, sell short, and place market or limit orders to purchase or sell shares. To help keep investors informed, using the fund's ticker symbol, one can easily access current and historical pricing and performance information via financial publications, select newspapers and other electronic services. #### Access to Alternative Securities and Strategies