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Non-Traded Closed End Funds & Interval Funds

A closed-end fund is an SEC registered investment vehicle that issues a fixed number of shares through an initial public offering. There are three types of closed-end funds-- listed, non-listed and interval funds:

  1. Traded (or listed) closed-end funds are listed on a stock exchange similar to an ETF and the price will fluctuate based on market supply and demand among other factors. As of April 2017, CEF IPOs are no longer approved for purchase at LPL. Therefore, traded CEFs can only be purchased on the secondary market.
  2. Non-traded (non-listed) closed-end fund are not publicly traded with the price determined by the fund’s NAV. Non-traded CEFs have limited liquidity in part due to some of the underlying holdings which can often be illiquid assets. In addition, non-traded closed-end funds typically have suitability restrictions enforced by the sponsor and/or the broker dealer.
  3. Interval funds, which are a type of closed-end fund, but they don't always act like them, offer to repurchase their shares at specified intervals. Interval funds can provide investors with access to less liquid investment strategies compared to open-end funds in an attempt to enhance risk-adjusted returns and can be used as an alternative source of return and/or income. Interval fund investments can be costly. Interval fund fees and expenses tend to be much higher than other closed-end funds and mutual funds.

Investing in mutual funds involves risk, including possible loss of principal.