What is a Closed-end Fund?

Rather than offering shares for sale on an ongoing basis, a closed-end fund generally sells a fixed number of shares at one time, in an initial public offering (IPO). After the IPO, the shares typically trade on a secondary market, such as the New York Stock Exchange or the Nasdaq. However, unlike regular stocks trading on these markets, closed-end fund stock represents an interest in a specialized portfolio of securities that is actively managed by an investment advisor.

A closed-end fund is typically concentrated in a specific market, industry, or sector. Its price will fluctuate in response to market forces and changes in the value of the securities held in the fund.