Series 6: 5.2.1. Types Of Closed-End Funds

5.2.1.  Types of Closed-End Funds

Types of closed-end funds include the same types as open-end investment companies, such as general equity, including income and growth; global/international equity; fixed income taxable; and fixed income tax-exempt. Closed-end funds are not forced to sell from their portfolios to meet redemptions, so they may offer advantages over open-end mutual funds. They also may offer access to markets that are difficult for mutual funds to invest in, since mutual funds must maintain liquidity. Closed-end funds tend to pay investors higher levels of income because they invest more heavily in income-producing assets.

Municipal bond funds make up the largest category of closed-end funds based on amount of assets. Municipal bond funds provide investor income that is tax-exempt for federal income tax purposes. In some cases, their income is exempt from state or local income taxes. They invest in bonds i