What are the advantages of closed-end funds?
Like open-end mutual funds, closed-end funds offer professional management, portfolio diversification and liquidity. In addition, closed-end funds can offer some other unique advantages. Access to Greater Investment Opportunities-Because the number of closed-end fund shares remains largely fixed, closed-end fund managers do not need to keep a large amount of the portfolio’s holdings “liquid” in order to meet shareholder redemption requests. This may often allow the managers to take advantage of certain investment opportunities they might not otherwise be able to with an open-end fund, and to invest for a longer time horizon. • Lower Management Expenses-Because fund managers do not need to keep a large pool of assets on reserve to cover the expenses associated with issuing new shares and fund outflows, closed-end funds may have lower expense ratios than their open-end counterparts. Leverage-Another potential benefit of closed-end funds is that many use leverage to seek to enhance return
