Description
This article is from the A Guide to
Closed-End Funds (CEFs).
Closed-End Funds: The Basics
A closed-end fund (CEF) is a publicly traded investment
company. It collects money from investors through an initial public
offering (IPO) and uses this money to invest in securities. The shares
of a CEF trade on market exchanges like the New York Stock Exchange
(NYSE) and the American Stock Exchange (AMEX).
A closed-end fund, as with other incorporated public companies, has
a board of directors elected by the shareholders. The board
appoints an investment advisor (and, possibly, sub-advisors)
for investment research and portfolio management. The investment
advisor employs a portfolio manager who is often assisted by a
team of analysts and who makes the actual investment decisions, in
accordance with the guidelines listed in the prospectus issued during
the initial public offering and any amendments to it. The day-to-day
administrative duties such as mailing shareholder reports or
responding to shareholder concerns may be performed by the investment
advisor, or a separate administrator may be employed.
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