The basics: Closed end funds vs. Mutual fund

[Sammydabullz]

The mutual fund portfolio relies on deposits from investors. In that the portfolio size increases when there are more investors depositing than those withdrawing. During a time when investors panic and withdraws, the mutual fund manager has to sell a portion of the portfolio to satisfy the demand. And since the value of the fund relies on Net asset value, the stocks are dumped at market close for the closing price rather than try to catch the high of the day.

Closed end funds are essentially the same thing as a mutual fund, but the portfolio is funded differently. The fund management company funds the portfolio with their own capital and then sells the market stock representing ownership in the portfolio. The stocks can be traded intraday without effecting the portfolio.

[kv968]

One thing to keep in mind with closed-end funds is that they their share price can differ greatly from their NAV.

[clatoden99]

Closed ended funds: A type of mutual fund, where the fund doesn't take new money after the inaugural offer. Thus, new investors have to buy the fund's stock from existing investors in the market. This is sometimes used by hot-shot managers in niche areas where you cannot guarantee a high return if the fund size increases rapidly.

Mutual Fund: A type of entity where common public pool their money to invest in stocks and bonds (among other things). The fund is managed by a professional money manager. Regulated by the governments and usually tend to be less risky than hedge funds.

[amarowsky]

I have had very good fortune with some CEFs I bought when I was younger with a much different investment philosophy. Now I have them use all of their dividends to rebalance my portfolio, instead of reinvesting in themselves....

Kind of a shame because they're paying a little more then 10% dividends, but putting into an sp500 is a much safer bet, imo.