Closed End Funds

The American Stock Exchange LLC has identified the following as benefits of closed end funds

Buying at a discount
Shares of closed end funds sometimes sell at a discount to their underlying NAV, which may give investors who buy shares at a discount the opportunity to enhance their overall investment return. The discount may not narrow over time, however, and short-term trading entails greater risks.

Leverage potential
Closed end fund managers can elect to issue senior securities or borrow money to leverage their fund's investments to potentially enhance yields and returns to investors, particularly with fixed income closed end funds.

Stable pool of capital
With a fixed number of shares, closed end funds don't have to keep cash on hand or sell securities in a declining market to meet shareholder redemptions. Managers can remain fully invested and invest in securities with longer time horizons, which may result in higher yields and returns for investors.

Intraday trading
Intraday trading allows investors to buy and sell shares of closed end funds just like the shares of other securities traded on an exchange, at any time throughout the trading day at market prices.

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Buying and selling flexibility
Through a brokerage account, investors can specify limit price, buy on margin, or sell short, just as with common stocks.

Growth and income opportunities
In addition to portfolio performance, closed end funds may provide other growth and income potential from dividends and distributions. Keep in mind that past performance is no guarantee of future results.

Clear investment objectives
Most closed end funds invest in either stocks or bonds in pursuit of a specific objective, such as growth or income. Here are some examples:
Municipal bond closed end funds seek monthly income that is exempt from federal taxes or from a single state's taxes (and in some cases local taxes) by investing in municipal bonds issued by state and local governments and agencies. Closed end municipal bond funds often use leverage to seek higher yields than similar funds that do not use leverage.
U.S. bond closed end funds seek monthly income by investing in U.S. Treasury, government agency, and corporate bonds.
U.S. equity closed end funds seek growth or growth and income by investing in U.S. equities. Sector closed end funds seek growth or growth and income by investing in stocks in a specific market sector or industry.
International and global closed end funds seek growth, growth and income, or monthly income by investing in equities or bonds around the world (global funds), outside the U.S. (international funds), or in a single region or country.