Closed-End Funds

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At Gearhart and Associates of Raymond James, we specialize in a specific type of investment called closed-end funds.

A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

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.

There is an inherent risk of capital loss associated with all closed-end funds. Closed-end funds frequently trade at a discount to net asset value. There is no assurance that the fund's price will appreciate to its net asset value. As with all securities, fund share prices will fluctuate with market conditions. When sold your shares may be worth more or less than their original cost.