|
Closed End Fund Investing
Management companies that trade on the secondary market are known as Closed End Funds. These investments are similar to mutual funds, except unlike mutual funds - they are not issuing new shares in the primary market ongoing.
The company does a one time initial public offering and then the shares of the closed end fund trade Over The Counter or on an exchange.
Trading
To buy shares in a closed end company, you will buy through a broker and pay a commission. These funds are trading in the market, so the buying and selling of closed end fund shares are the same as buying shares of stock.
The value or price of the traded funds are based on performance of the fund along with supply and demand - just like any other negotiable security.
NAV - Net Asset Value
The true value per share of a closed end fund can be found in it's NAV or Net Asset Value. This is calculated daily and is based on the total net income - operatating expenses such as costodian banks etc. divided by the number of outstanding shareholders.
Although the NAV is calculated daily and represents the true value of the fund per share, the share price is based on the trading in the market. The trading price of a closed end fund should trade fairly close to it's NAV.
Closed end funds have an investment advisor that trades the securities and manages the cash in the fund. The advisor has discretionary authority within the limits of the funds investment objectives. The securities can be composed of stocks, bonds or in the case of a REIT - real estate investments.
Dividends are paid to shareholders and taxable to the shareholders. This also applies to open end mutual funds.
Retirement Plan Links for Employers and Investors
401 k Plan - In Service Distribution - 401k Company - 401 k Administration - Small Business Retirement Plan - Self Employed 401k - Plan Servicing Company - 401k Investing -
Company Plan Provider
403b Rules
Questions - Help - Fees, Service Options or any other question:
Companies: If you are a company seeking retirement plan rules, service or other help - contact our experts at American Investment Training by using our free Company Retirement Plan Question Form.
Individuals: If you are seeking investment or insurance product assistance for yourself, you can contact our finance experts here by using our Investor Help Form.
|
2006 American Investment Training, Inc.