Closed-End Funds

Our Niche In The Market

Doliver has been managing money for clients since 1988, over 28 years. It focuses exclusively on investing in closed-end funds (CEFs). A closed-end fund is a professionally managed portfolio of individual securities which has a specific value, called the “net asset value” (NAV). The NAV is derived from the sum of the total value of securities held in the portfolio, divided by the total number of outstanding shares. A fund’s NAV is a specific price per share and is calculated daily based on the closing market price.

 

Different from a mutual fund, a closed-end fund shares are not redeemable from the fund itself, based on the daily NAV. Instead, the shares of a closed-end fund trade on the major exchanges where the forces of supply and demand cause share prices to fluctuate. Since shares are bought and sold in the open market, at any given time, the share price of a closed-end fund may be greater (premium position) or less (discount position) than the NAV, thus creating potential pricing inefficiencies. As a simplified illustration, a closed-end fund investor may buy $1 worth of stock ($1 NAV) for 90 cents. Or, one may sell $1 worth of stock ($1 NAV) for $1.10. Of course, the converse may also be true. Although more than 550 different closed-funds exist today, with over $215 billion dollars in total capitalization, they represent a relatively small part of the overall market.