While closed-end funds trade like stocks, they are like mutual funds in that they include a variety of different individual securities, often from a specific industry, sector or geographic market. The closed-end fund shares represent an interest in this portfolio, actively managed by a professional money manager.
There is an important difference in how we buy closed-end funds. We don’t purchase them during the IPO, but later on the secondary markets. This is because the prices of closed-end funds fluctuate, not only due to the value of their underlying securities but also based on supply and demand. We choose to wait until shares trade on the stock exchange for less than they are worth, or in other words, when share price is lower than their net asset value (NAV).
We rely on our specialized expertise and extensive closed-fund research at Raymond James to find what we consider to be the best opportunities for meeting the objectives of our clients.