What is a Closed End Fund?

Closed-end funds combine elements of mutual funds and publicly traded stock.

• Like mutual funds, they are diversified, professionally managed portfolios with stated investment objectives
• Like stock, they issue a fixed number of shares that are traded daily on an exchange

So, while mutual funds create shares to meet investor demand, and price those shares based on the value of the portfolio’s securities, closed-end funds, like stocks, have fixed shares that rise and fall in value in response to market demand for the fund itself.

This hybrid structure gives closed-end funds a number of potential advantages over mutual funds:

• Closed-end funds are not required to maintain a “cash cushion” to cover investor redemptions, so fund managers can invest strictly for performance
• Closed-end funds typically have lower expense ratios than mutual funds, since they do not incur the ongoing costs of creating and redeeming shares
• Closed-end fund managers don’t need to invest or redeem the shareholder dollars flowing in and out of the fund on a daily basis, so they have more flexibility in how much to invest in a particular security and how long to hold it

ING Funds offers several innovative closed-end funds. Talk with your Financial Advisor to find out if any of ING Funds’ closed-end products might be right for your investment strategy.