CLOSED-END FUNDS
Good intelligence is nine-tenths of any battle.
—NAPOLEON
Chapter 10 discussed mutual funds and the appeal of index funds. Some mutual funds may be even more attractive than index funds. To see this, we need to make an important distinction between open-end and closed-end funds.
Open-end funds increase or reduce the number of shares outstanding as more money is invested in the fund or withdrawn from the fund. Suppose that a mutual fund with the optimistic name BeatTheMarket has 10 million shares outstanding and owns a portfolio of stocks worth $100 million. Its net asset value (NAV) per share is calculated by dividing the market ...
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