Closed end & Open ended Funds

Closed-end funds trade as stocks on all the major exchanges.They come in all sizes and varieties:Closed-end bond funds,general equity funds,growth funds,value funds etc.
The main difference between a Closed-end fund and an Open-ended fund is that a Closed-end fund is static.The number of shares stays the same.A shareholder in a Closed-end fund exits the fund by selling his or her shares to somebody else,the same as if he or she were selling a stock.An Open-ended fund is dynamic.When an investor buys in,new shares are created.When the investors sells out,his or her shares are retired and the fund shrinks by that amount.

One feature of the Closed-end fund is that since they trade like stocks they also fluctuate like stocks,a Closed-end fund sells at either a premium or a discount to the market value of its portfolio.Bargain hunters have excellent opportunities in market sell-offs to buy a Closed-end fund at a substantial discount to its NAV(Net Asset Value).