Asset Classes

Closed-End Mutual Funds


Similar to open-end mutual funds and hedge funds, closed-end mutual funds are companies which invest in securities which are selected by a fund manager. As opposed to open-end mutual funds that can create and issue new shares to meet the demand of new investors, the share pool of a closed-end mutual fund is fixed at its initial public offering (IPO). In other words, once all shares are issued, the fund is closed and cannot create, sell or cancel any additional shares. The fund manager uses the proceeds of the money pooled by investors to assemble a collection of investments within a portfolio which the fund manager selects based upon the fund’s investment focus. Investors can achieve liquidity through selling their shares in the secondary market.

Why Closed-End Mutual Funds?

None of these specific investment classes are recommended by, however, better understanding of them will help you prepare for a more secure retirement. Discuss each asset class or particular investment carefully with your financial advisor before making any investment decision.

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