"Could you, please, explain the main differences and advantages and disadvantages between a close end fund and an open end fund?

"Thank you very much for your time to answer what might be a very basic question for most of the collective and once again, thank you for your superb coaching."

David Fuller's view Thanks for your comments and a question which will be of interest to some other subscribers, particularly those who do not live in the USA or UK. Others will know more about this subject than I but here are the main differences, as I see it.

Closed-end funds (called investment trusts in the UK) are quoted on the stock exchange and trade just like shares, so the price will be changing frequently. You can buy or sell them while the market is open, for the usual commission that you would pay for shares. Mutual funds (unit trusts) may only be quoted at one price a day, usually have a front-end load in the UK (negotiable) and also a redemption charge, particularly in Europe. Because closed-end funds trade like shares, they will move between a discount to net asset value (NAV), which is the norm, and a small premium, depending on sentiment regarding the sector or even the manager. Mutual funds usually quote a bid-ask price, which can be wide in some instances and may also be negotiable. Historically, my impression is that annual charges are somewhat lower with closed-end funds, although they have tended to rise over the last decade, which is an additional expense for the investor.

Personally, and living in the UK, I have always had a preference for investment trusts (ITs) for ease of dealing. Also, if I like the market covered and the IT sells at a discount of perhaps 10% to NAV, which is not unusual, I feel that it is not a bad idea to buy 1£ for 90p. It usually makes sense to take profits on ITs when they occasionally move to premiums of 5% to 10% relative to NAV because they will revert back to discounts over time.