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Are closed-end funds a good investment?

A closed-end fund issues shares only once. Closed-end funds also tend to use leverage, or borrowed money, to boost their returns to investors. That means higher potential rewards in good times and higher potential risks in bad times. What Is the Downside to Closed-End Funds?

What is a closed-end fund?

A closed-end fund is a type of mutual fund that issues a fixed number of shares through one initial public offering (IPO) to raise capital for its initial investments. Its shares can then be bought and sold on a stock exchange, but no new shares will be created, and no new money will flow into the fund.

Can a closed-end fund buy back shares?

Similar to stocks and ETFs, its shares fluctuate in price throughout the trading day. However, the closed-end fund's parent company will issue no additional shares, and the fund itself won't buy back shares—unless the closed-end fund is an interval fund —which is a type of closed-end fund that can buy back shares.

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