Closed-ended funds are professionally managed investment companies whose shares are publicly traded via an exchange.
Like regular open-ended investment funds, closed-ended funds invest in a portfolio of assets on behalf of investors.
In contrast to open-ended funds, closed-ended funds raise capital at launch via an initial public offering (IPO) of shares, which can then be traded by market participants on the open market without the direct involvement of the investment firm managing the fund.
This means capital does not flow directly in or out of the closed-ended fund when investors buy or sell the shares, giving the fund a more stable asset base that can be more appropriate for investing in less liquid markets and securities.
Closed-ended funds themselves do not issue or redeem shares on a daily or regular basis. They can only increase capital through portfolio performance, issuing debt, or conducting additional share offerings.