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Closed-End Funds Issues and Studies

Chapter
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Part of the Innovations in Financial Markets and Institutions book series (IFMI, volume 18)

Abstract

This chapter provides brief reviews of the numerous articles that investigate various aspects of closed-end fund (CEF) pricing. Much of the research focuses on the causes of the existence and persistence of fund share price discounts to net asset value. These works span the past half century and have yielded many results including the following: (1) market frictions, such as expenses and capital gains effects, only partially explain the existence of discounts; (2) country funds which target countries having international investment restrictions tend to sell at premiums to net asset value; (3) investors who purchase most fund IPOs usually experience poor initial returns; (4) large discounts tend to be associated with periods of market pessimism, and these discounts narrow during periods of euphoria; and (5) the mean reverting behavior of discounts appears to be responsible for the profitable discount-based trading strategies reported by some authors.

Keywords

Closed-end funds (CEFs) Discounts Premiums Perceptions Market frictions Capital gains Fees Expenses Country funds Investment restrictions Sentiment Trading strategies Bond Expectations Turnover Restricted holdings 

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.College of Business and Information ScienceTuskegee UniversityTuskegeeUSA
  2. 2.College of Business AdministrationNortheastern UniversityBostonUSA
  3. 3.University of North FloridaJacksonville FLUSA

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