Are closed-end funds overlooked because of exchange traded funds (ETFs)?  Closed-end funds have been around for some time, even before mutual funds, and John Waggoner of USA calls them unusual creatures.  They are similar to a mutual fund in that they are a basket of securities with a fund manager, but there are some differences. 

Their main difference is how these funds are priced.  Mutual funds run a tally of the market value of holdings and are priced at the end of the day.  Closed-end funds on the other hand are traded continuously throughout the day and are priced in relation to, but independent of, the value of the holdings.  Closed-end funds can trade for a premium, but most trade at a discount. The share price might reflect the markets opinions of the fund manager, or the future value of the fund’s portfolio.

The chart below compares the ETF, iShares MSCI Mexico (EWW) to its closed-end fund counterpart Mexico Fund (MXF).


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.