Closed End Funds Produce Income But The Share Price Can Be Highly Volatile
Closed end funds are different than open end mutual funds.
With an open end fund, as long as you want to buy shares, the management company will sell them to you. They will take your money, add it to the portfolio, and create more shares. You always buy shares of an open end fund from the fund company, never on the secondary market. ( Income )
When a closed end fund starts, the company raises a set amount of money, and issues a specific number of shares. No new shares are created. Investors can buy the fund only on the secondary market, from someone else who is selling shares.
Once the initial money is raised, the fund manager manages the investments according to the fund’s goals and objectives. Closed end funds can be invested in equities or bonds.
Relate : Dividend Date Ex