assets held by a closed-end investment trust company influence the share value of such a company, market perceptions related to future performance and other factors are more influential in determining the value of the shares of a closed-end investment company.
A closed-end investment trust company may share the one of the characteristics of a mutual fund when the investment holdings of such a company are financial securities issued by corporations and governments. Thus, in the contemporary marketplace, closed-end investment funds are marketed as mutual funds.1 In reality, holding shares in one of these closed-end diversified investment companies has more commonalities with holding equity shares in a publicly-traded holding company than with the holding of shares in an open-end investment trust, or mutual fund.
The differences between an open-end mutual fund and a closed-end diversified investment company marketed as a type of mutual fund may appear to be subtle, arcane, and pedantic to investors to most investors and perhaps to some brokers. The differences, however, are both real and significant. The value of a holding in an open-end investment fund is derived directly from the market value of the funds investments, while the value of a holding in a closed-end diversified investment company is the trading value of that company's equity shares in the market, wherein the market value of the funds invested by the company is but one of several factors that influence the trading price. The ease of entry into and exit from open-end funds also distinguish true mutual funds from the closed-end diversified investment funds wherein the conditions of entry and exit are determined by market forces.
There are many different types of mutual funds, such as growth funds, diversified funds, balanced funds, money market funds, and so forth. These fund types describe the types of securities held by the investment company. Thus, invest...