Closed End Fund Primer - What are Closed-End Funds - Closed End Fund High Dividend Payers | Summary and Q&A

TL;DR

Closed-end funds are publicly traded funds that can be bought or sold throughout the trading day, but the money invested in them never goes into the fund itself. They can trade at a premium or discount to their underlying net asset value.

Key Insights

• 😚 Closed-end funds, like ETFs, can be traded throughout the day, providing more flexibility for investors.
• 😚 The price of closed-end funds is determined by supply and demand from investors and can trade at a premium or discount to their underlying net asset value.
• ✋ Closed-end funds often have higher fees compared to ETFs, but some funds offer high dividends and good returns.

Transcript

Hi I'm Jimmy in this video we're gonna look at. Closed end funds. We're gonna look at the basics of what a closed end fund is how they compare to things like mutual funds or ETF. And then we're gonna look very quickly at a couple examples to illustrate what types of funds are out there. OK so a closed end fund is actually a type of mutual fund. And... Read More

Questions & Answers

Q: How do closed-end funds differ from traditional mutual funds and ETFs?

Closed-end funds can be traded throughout the day, unlike traditional mutual funds that can only be traded once per day. They also have fixed shares outstanding and trade at a premium or discount to their net asset value.

Q: How are the prices of closed-end funds determined?

The prices of closed-end funds are determined by supply and demand from investors. If there is high demand, the price may trade at a premium to the net asset value, while low demand may cause the price to trade at a discount.

Q: Do closed-end funds have higher fees compared to ETFs?

On average, closed-end funds have higher fees than ETFs. However, some closed-end funds may offer high dividends and good returns, which could offset the higher fees.

Q: What are the tax implications of dividends from closed-end funds?

Dividends received from closed-end funds may be treated as capital gains and could have an impact on taxes. Each individual's tax situation should be considered when investing in closed-end funds.

Summary & Key Takeaways

• Closed-end funds, like ETFs, can be traded throughout the day, while traditional mutual funds can only be traded once per day.

• The price of closed-end funds is determined by supply and demand from investors, and they can trade at a premium or discount to their underlying net asset value.

• Closed-end funds can have higher fees compared to ETFs, but some funds offer high dividends and good returns.