The closure period is long and the number of issues is fixed. During the closed period, the holder cannot redeem it and can only buy and sell it in the secondary market. Closed-end funds do not have to worry about redemption during their existence.

The holder cannot ask the fund company to repay in advance. Therefore, fund companies have great autonomy in this money and can even play the trick of "interest transfer". Of course, there are also well-run fund companies and fund managers, whose closed-end funds are not necessarily worse than open-end funds.

Another feature of closed-end fund is that it has a duration. In China, this term cannot be less than five years, and the term of general closed-end funds is fifteen years.

After the closed-end fund expires, there are three ways to deal with it: one is liquidation, that is, deducting a certain fee from the net value of the fund and returning it to investors; The second is to turn into an open-end fund, which is what we often call "closed to open"; The third is to extend the maturity period, which is rarely used.

Extended data

Development of closed-end funds

Closed-end funds belong to trust funds, which refer to investment funds whose scale has been determined before issuance, fixed within a specified period after issuance and traded in the securities market. Since the early 1990s, 54 closed-end funds have been established in China.

Because closed-end funds are traded by bidding in securities trading, the transaction price is affected by the relationship between market supply and demand, which does not necessarily reflect the fund's net asset value, that is, the transaction price of closed-end funds has a premium and discount phenomenon relative to its net asset value. The practice of foreign closed-end funds shows that the transaction price often has the price fluctuation law of first premium and then discount.

Judging from the operation of closed-end funds in China, no matter how the fundamental situation changes, the transaction price trend of closed-end funds in China has never deviated from the price fluctuation law of first premium and then discount.

At present, China's closed-end funds are in the stage of "discount", and the discount rate of closed-end funds in China (net value MINUS market value and then divided by net value) has gradually increased since 2002. The long-term discount rate of some closed-end funds is as high as over 30%, which is significantly higher than that of foreign closed-end funds.

According to the provisions of the Measures for the Administration of Securities Investment Funds, the income distribution of closed-end funds shall not be less than once a year, and the annual income distribution ratio of closed-end funds shall not be less than 90% of the realized income of funds. Closed-end funds generally pay dividends in cash.

Source of reference: Baidu Encyclopedia-Closed-end Fund