ETFs 1, Closed-End Funds 0

The Wall Street Journal’s Ian Salisbury highlights a key difference between ETFs and closed-end funds:

“Unlike the stock of index-based exchange-traded funds, or ETFs, shares of closed-end funds frequently change hands at premiums or discounts, prices significantly above or below the value of their underlying assets.”

It seems that investors that paid a premium to buy into IPOs of closed-end funds in 2007 now find themselves in a position of selling at a loss, even if the funds’ assets appreciated.

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