Closed-End Funds

Closed-End Funds

What is a Closed-End Fund?

A closed-end fund (CEF) is a pooled investment product that has a fixed number of shares. Unlike traditional open-end mutual funds that consistently issue and redeem shares, CEF liquidity is provided in the secondary market.

There are several unique aspects of CEFs:

  • Fixed pool of assets – there are minimal cashflows in and out of the fund which allows the manager to invest in less liquid positions, take leverage and minimize cash drag
  • Secondary market trading – since many CEFs are listed on an exchange they can trade throughout the day rather than once a day as in open-end funds
  • Redemption may not be at NAV – purchases and redemptions are made on the secondary market, not directly with the asset manager, and they often trade at a discount or premium to net asset value
  • Minimums – CEFs generally do not have a minimum to invest beyond the cost of one share

Why invest in a Closed-End Fund?

The fixed pool of capital with minimal cashflows may allow the manager to take positions that are not available in open-end products. This can offer investors exposure to strategies not otherwise available to the general public. For example, a manager may be able to increase exposure to derivatives, implement leverage, or purchase fewer liquid investments.

Why invest in Voya Closed-End Funds?

Voya has been engineering and managing CEF solutions for over a decade and are committed to ensuring the strategies continue to meet their investment objectives

Management Expertise

  • One of the most experienced closed end fund platforms with a track record dating back over 30 years 
  • Brings together the depth of resources and experiences across a multi-billion-dollar investment management firm
  • Expansive derivatives expertise to manage the options overlay and hedging strategies

Income Potential

  • Designed to help generate income
  • Seeks to provide an income stream to investors by paying distributions monthly or quarterly

Risk Discipline

  • Provide diversified exposures across issuers, industries or geographies to help reduce risk, and better capture desired outcomes
  • Construct portfolios to help minimize unintentional risks and improve risk-adjusted returns
  • Integrated risk management helps ensure deliberate and controlled exposures