• Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

The wrong time to buy closed-end shares

Article

My broker recommended shares of a new closed-end bond fund. It sounds like a good fund, but I hear that closed-end funds are traded and priced a bit differently than open-end ones. Can you explain?

My broker recommended shares of a new closed-end bond fund. It sounds like a good fund, but I hear that closed-end funds are traded and priced a bit differently than open-end ones. Can you explain?

Open-end funds issue new shares as needed, and investors pay net asset value (NAV) for them-the total of the fund's net assets (after fees and expenses) divided by the number of outstanding shares. In contrast, closed-end funds issue a fixed number of shares that subsequently trade on a stock exchange at a price that often differs from the NAV. At launch time, the trading price typically remains close to the issue price and factors in underwriting fees, commissions, and other start-up costs. Then a few weeks or months later, the price drops. That means buyers who invest early on pay top dollar, while those who wait essentially get their shares at a discount. So if you're interested in the fund, you'd be wise to postpone your purchase for a while.

Related Videos
© drsampsondavis.com
© drsampsondavis.com
© drsampsondavis.com
© drsampsondavis.com