Types of Closed-End Funds
Closed-end funds include the same types of funds as open-end investment companies, such as general equity (including income and growth funds), international equity, fixed income taxable, and fixed income tax exempt. Closed-end funds are not forced to sell from their portfolios to meet redemptions, so they may offer advantages over open-end mutual funds. They also may offer access to markets that are difficult for mutual funds to invest in, since mutual funds must maintain liquidity. Closed-end funds tend to pay investors higher levels of income because they invest more heavily in income-producing assets.
Municipal bond funds make up the largest category of closed-end funds, based on the amount of assets. Municipal bond funds provide investors income that is tax exempt for federal income tax purposes. In some cases, their income is exempt from state or local income taxes as well. They invest in bonds issue