answersLogoWhite

0

The major drawback of a closed-ended fund is that if the market tanks, demand for the shares can evaporate overnight, leaving you holding a worthless investment.

While a closed end fund has many benefits, there are also some drawbacks. The main drawback is that you can not use the initial capital to continue dividend payments.

User Avatar

Wiki User

15y ago

What else can I help you with?

Related Questions

How and where to sell a closed ended mutual fund?

A closed end mutual fund is a mutual fund where the sponsor does not buy or sell additional shares after the original underwriting. The fund shares trade on exchanges like stocks and the price of the closed end fund moves based on demand and supply. Thus, one needs to find a stock broker to which the closed end fund shares can be transferred and then sold.


What is difference between closed end fund and exchange traded fund?

An exchange traded fund (ETF) is a type of fund that is traded intra-day on an exchange. Examples include index ETFs and closed-end ETFs. Usually people use the term closed-end funds, but they are a type of exchange-traded fund. An exchange traded fund (ETF) is a type of fund that is traded intra-day on an exchange. Examples include index ETFs and closed-end ETFs. Usually people use the term closed-end funds, but they are a type of exchange-traded fund.


What is the use of closed end mutual funds?

A closed end fund means that an investment company that raises a fixed amount of capital goods, gets is listed and traded on the stock exchange. This word means closed end mutual funds, but closed end fund is short.


What is A closed-end fund?

A Closed ended fund is one that does not accept further investments from investors once the initial offer period is complete.


What is the SIC code to a Closed-end investment fund?

The typical SIC code is 6726.


Can open end mutual funds short stocks?

The vast majority of mutual funds do not short stocks. Whether it is an open end or closed end fund is irrelevant. If a fund can short stocks, this strategy will be described as a "long-short" fund or something similar.


How can I set up a closed end fund?

To set up a closed-end-fund, it is best to contact an investment broker and they can explain to you the types of accounts available and determines what’s best for you. There are 2 main types of accounts: cash accounts and margin accounts. Look in the phone book for a broker or such service is usually offers at your local bank.


How many mutal fund in Nepal?

MUTUAL FUND IN NEPALNepal is a land lock country and it is between the two big growing economy country China in north and India in South,East&West.In Nepal there is not proper growing of Financial Markets so the Mutual Fund concept so in Nepal there is only two mutual fund the are:-NCM Mutual Fund &CBU Mutual Fund1. NCM Mutual FundThis fund is generated by Nepal Industrial Development Co-operation in 2059. This fund is an Open end fund.2. CBU Mutual FundThis fund is generated by Citizen Investment Trust and this is a closed end mutual fund.


When did Garland Fund end?

Garland Fund ended in 1941.


3 Upon closing the books at year-end a government should a. Debit fund balance and credit reserve for encumbrances c. Debit fund balance and credit encumbrances.?

Debit fund balance and credit encumrances because the reserve for encumbrances need not be closed because it is a balance sheet account.


What is the difference between close ended mutual fund and open ended mutual funds?

An open end mutual fund generally continues to accept investment after the fund is started. As this happens, the fund can grow larger as more investors buy shares in the fund. The open end fund then takes those new dollars and buys additional securities. Shares are priced at the end of day by taking the value of the fund's net asset value divided by the number of shares outstanding. Each share is thus priced at par value to the underlying investments in the fund. To "cash-out" of one's investment, the shares are redeemed by the fund itself, usually after trading is over for the day at the net asset value price for that day. Occasionally, if management of an open end fund feel cash is flowing into the fund to quickly, they may close the fund to new investment, but is still classified as an open end fund. A closed end mutual fund generally accepts investment only during initial setup. After that, shares in the fund are bought and sold similar to a stock on one of the exchanges. The shares may sell at a discount or a premium to the underlying securities owned by the fund, depending on the market. To "cash-out", an investor sells the shares on the exchange at the market price during the trading day. The fund itself is not involved in the day-to-day sale and purchase of fund shares.


Difination of closed end mutual fund?

A close ended mutual fund is more or less like a bank CD. The investor invests his money and the fund manager holds the money for as long as the minimum investment period stipulated in the fund. The investor cannot redeem his investments until this time is over. for Ex: ELSS funds in India have a 3 year lock in period and an investor cannot encash his investment until the end of 3 years from the date of his investment.