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Popularity of Closed End Funds

Despite their long presence (since 1893, 30 years before the introduction of open end funds) in the market, we have less than a thousand closed end funds. One reason that could be perhaps attributed to this is the violent fluctuations of prices. This may scare away investors whose objective is steady income.

Additionally, some closed end mutual funds perform strong on the market fortunes. Because of a host of varieties, they have differing prospective, volatility, risk demography and of course fees. Their investment portfolio and objectives also determine how they trade along demand and supply. Strong mutual funds out perform their peers subject to above parameters. Couple this with the low commission of the closed end funds pay to the brokers to make it benefit you in shorter trading cycles. These are some of the contributing factors to low popularity.
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Some Additional Notes On Closed End Mutual Funds
Closed end mutual funds offer shares to its current holders at a reduced price, which is at a price less than the market value, when it wants to raise additional capital. This is particularly possible as closed end funds are traded like normal stocks. The diluted share price makes it possible for share holders to purchase below market price. Some of the best closed end mutual funds pay out dividends monthly depending on their policies.

On the contrary as open end funds are sold and repurchased guided NAVs and are not traded in the open market, you will not have the benefit of huge price fluctuation. Also the question of rights issue will not rise at all with an open end fund as you will need to deal with the fund only for selling or purchasing shares.
Best Closed End Mutual Funds
Mutual funds' performance grossly depends on their portfolios apart from other parameters. You can expect their performance curve to imitate the market curve but with a safety net thanks to their diversification. Industry news papers, magazines and internet are flush with regular updates on closed end mutual funds too. A closer study with an insight should help you determine the best closed end mutual fund for you.

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