Closed ended fund obviously NAV relates to market price but there are other factors.
1. Management
2. Discount or premium to net asset value. If the general market is perceived to be going down a closed ended fund's discount to NAV will widen and vice versa.
You are correct that a closed end fund doesn't create additional shares, but they are still traded on the market. The price has more to do with the market's perception that the fund manager is really smart (or dumb); rather than the actual NAV. The price of a closed fund isn't so much about getting more investors into the fund (remember, there's only so many shares) - it's more about how the pattern of bids and asks work out. Like shares of any liquid investment, you will always have people wanting to exit for whatever reason; and they try to hold out for the highest price. If you also have buyers who really want in (because of some nice buzz going around about that fund), the price will likely go up. As opposed to open-ended funds, which are really a lot more tied directly to the NAV.
The Wikipedia artcles on this are pretty good:
http://en.wikipedia.org/wiki/Closed_end_...
http://en.wikipedia.org/wiki/Open-end_fu...
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Can anyone help me understand the differences between a closed end fund and a open ended one?
According to my knowledge the difference is
1) open ended funds aka mutual are funds which can have as many shares and thr price is determined by the nav?
2) closed is where there are a set number of shares and the price of the fund is determined by supply and demand just like a stock
Also regarding funds, the net asset value (nav) does that include the funds that investors invest? So if more investors put money into that then the nav would go up? Therefore the price of the fune will go up?
Also say if a fund earned 20% for the year 2012/13 does that mean the fund went up 20% in the price of it or the nav?
With closed end funds because the price of the fund is determined by supply and demand does that mean if mire investors invest in the fund then the price will go up?
Can you please recorrect me where im wrong please? Thanks
