A closed-end fund, or CEF, is comprised of a specialized portfolio of securities. The fund is a publicly traded company that raised a fixed capital through an initial public offering. While a CEF is listed and trades like a stock on an exchange, the fund has a fixed number of shares. New shares or units are not created to meet growing demand.
ETNs are not exchange traded funds. ETNs are senior, unsecured, unsubordinated debt securities issued by an underwriting bank. Consequently, ETNs are subject to the credit worthiness of the issuer.
CEFL’s leverage component is reset monthly, unlike most other exchange traded funds that track holdings on a daily basis. Consequently, investors may hold the ETN for a longer period, but the performance can still diverge over extended periods due to compounding effects.
For more information on new fund products, visit our new ETFs category.