What is a CEF (Closed End Fund)?
A Closed-End Fund (CEF) is a type of investment fund with a fixed number of shares that are traded on the stock exchange, similar to a stock. CEFs raise a certain amount of capital through an initial public offering (IPO) and then invest that capital in a portfolio of securities, similar to a mutual fund.
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Can I sell my CEF shares at any time?
Yes, since CEF shares are traded on the stock exchange, you can buy or sell shares at any time during trading hours at the current market price.
What are the benefits of a CEF?
Leverage sophisticated investment strategies normally reserved for institutional investors, now accessible to retail CEFs offer regular income distributions, ideal for income-focused investors Enhance returns through leverage Higher potential income ...
How are CEFs priced?
The market price of a CEF is determined by supply and demand in the market and can differ from the fund's NAV. This difference can result in the fund trading at a premium (price above NAV) or a discount (price below NAV).
How are CEFs taxed?
The tax implications for CEF investors can vary based on the type of income the fund generates and how the investor holds the fund (e.g., in a taxable account vs. a tax-advantaged account). It's recommended to consult with a tax advisor to understand ...
Are there any fees associated with CEFs?
CEFs may charge management fees and other expenses, which can vary by fund. Additionally, when buying or selling shares on the stock exchange, you may incur brokerage commissions.