Closed End Fund (CEF)

Learn how to invest in closed end fund (CEF). Learn what you need to know about top CEFs. Are they the same as ETFs or mutual funds?

What is Closed End Fund (CEF)?

Closed End Fund (CEF) is one of investment funds which invest in stocks, bonds, commodities,
money market or other funds. A closed-end fund is a pooled investment fund with a money manager managing the portfolio. The fund raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange such as NASDAQ, or NYSE (New York Stock Exchange).

Investor can buy and sell CEFs throughout the day just like stocks. Some of closed end funds have higher expense ratio, and it may involve leverage to increase its returns.

How to Invest in Closed End Fund (CEF)

Closed End Fund (CEF)Similar to stocks or ETFs (Exchange Traded Funds) , you can buy closed end funds from your regular brokerages. Popular brokerages to buy CEFs include:
  • Merrill Edge
  • Fidelity
  • TD Ameritrade
  • Vanguard
  • e*Trade
  • Interactive Brokers (IB)
  • Charles Schwab
  • Scottrade
  • TradeKing

Good of CEFs

There various advantages to invest in an Closed End Funds (CEF):
  1. Investors get the diversification similar to mutual funds or ETFs
  2. Investors can buy as little as one share. They can sell shorts or buy on margin account.
  3. There are no minimum deposit requirements. Please check with your brokerages for initial funding requiment.
  4. They may provide high yield for income
  5. Some brokerages also offer no commission fees for buying or selling CEFs.

Issuer of CEFs

Top issuers of exchange traded funds are:
  • DoubleLine Capital
  • Nuveen Fund Advisors
  • Blackrock Advisors
  • Eaton Vance
  • Legg Mason Partners Fund Advisors, LLC
  • Pacific Investment Management Company LLC (PIMCO)
  • Invesco Advisers
  • First Trust Advisors LP
  • Gabelli Funds Inc
  • John Hancock Advisers LLC
  • Cohen & Steers Capital Management, Inc.

Top Closed End Funds (CEFs)

  1. Nuveen AMT-Free Quality Municipal Income Fund (NEA)
  2. Central Fund of Canada (CEF)
  3. DNP Select Income Fund (DNP)
  4. PIMCO Dynamic Credit Income Fund (PCI)
  5. Nuveen Quality Municipal Income Fund (NAD)

More Articles about Closed End Funds

Interested in closed end funds, you can find more articles about it below.
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