Closed-End Management Company

The majority of Mutual Funds are structured along either one of two lines. An open-end mutual fund adds on more shares as each new investor subscribes, resulting in a minute pro rata dilution in the portfolio, but overall larger growth as AUM continue to accumulate, somewhat similar to a stock split. Conversely, a sell order reduces the total number of shares accordingly.

A closed-end mutual fund has a fixed number of shares that will often be listed on the NYSE and are synonymous with an Exchange-Traded Fund, or ETF. As the number of shares are fixed, shareholders benefit or suffer from the closing price as listed at the end of each trading session.

Closed-end management companies oversee closed-end funds, often in a pooled arrangement, due to the reduced complexities of closed-end funds. There are no investor vs. admiral classes of shares, no front or back loads, no need to recalculate the daily number of shares, etc. that require administrative attention to the same degree as open-end funds.

For a somewhat gruesome but accurate visual analogy, the TV show The Walking Dead has an ever growing population of zombies that keep spreading and never seems to end...like an open-end fund. However, there was one group that created a fortress out of junk and scrap metal with an industrial shredder machine built over a pit. As zombies were lured into the pit, their parts would continue to fill volume in the pit, but the space within the junk fortress remained unchanged, like a closed-end fund.