What is a Closed-End Investment Company?
Closed-end investment companies are businesses that are devoted to the managing of investments that involve a limited issue of shares for sale and distribution. Often, the management investment company will also deal in senior securities as well. Generally, the closed-end investment company does not redeem any outstanding shares. The process for issuing shares for sale is simple. The closed-end investment company will buy and sell the limited number of shares in a secondary market, rather than serving as the primary market. Different classes of shares may be considered for acquisition and sale. Often, the sale price for the shares is based more on the current rate of supply and demand rather than the net asset value associated with the shares. Typically, a closed-end investment company will choose to utilize a secondary exchange or an over the counter market. Investors often choose to do business with a closed-end investment company because it is possible to come across a great offer.
