Closed-end funds do not continuiously offer shares for sale, instead selling a fixed number of shares in an initial public offering (IPO), after which time the shares trade on a secondary market. The shares associated with closed-end funds generally are not redeemable. The price of closed-end fund shares that trade on a secondary market is determined by the market and may differ from the shares’ net asset value (NAV).
The investment portfolios of closed-end funds generally are managed by separate entities known as investment advisers. Investment advistors must be registered with the Securities and Exchange Commission.