Referring to an investment fund or financial arrangement that has a fixed number of shares or units issued initially, and generally does not offer ongoing subscriptions or redemptions. These funds trade on exchanges, their value fluctuating based on market demand for the existing shares. This contrasts with open-end funds, which continuously issue and redeem shares based on investor demand. closed-end structures often imply a specific term or objective for the investment.
Closed-end meaning with examples
- The investor was drawn to the potential high yields of a closed-end bond fund. Unlike an open-end fund, it offered a set number of shares, bought and sold on the stock exchange, making its pricing dependent on supply and demand, not daily net asset value calculations.
- A closed-end investment trust focusing on renewable energy projects was launched. It issued a fixed amount of shares and used its capital to invest in wind farms and solar installations, offering investors exposure to this specific sector of the market.
- With the aim of supporting long-term capital growth, the wealth manager invested in a closed-end equity fund. This fund, trading on the exchange, offered a concentrated portfolio of established businesses and a limited number of shares.
- Investors interested in real estate might explore a closed-end REIT, with shares bought and sold on the exchange, providing access to the real estate market with limited redemptions and a fixed number of shares.