<P> Closed end funds are typically traded on the major global stock exchanges . In the United States the New York Stock Exchange is dominant although the NASDAQ is in competition; in the United Kingdom the London Stock Exchange's main market is home to the mainstream funds although AIM supports many small funds especially the venture capital trusts; in Canada, the Toronto Stock Exchange lists many closed - end funds . </P> <P> Like their better - known open - ended cousins, closed - end funds are usually sponsored by a fund management company which will control how the fund is invested . They begin by soliciting money from investors in an initial offering, which may be public or limited . The investors are given shares corresponding to their initial investment . The fund managers pool the money and purchase securities or other assets . What exactly the fund manager can invest in depends on the fund's charter, prospectus and the applicable government regulations . Some funds invest in stocks, others in bonds, and some in very specific things (for instance, tax - exempt bonds issued by the state of Florida in the USA). </P> <P> A closed - end fund differs from an open - end mutual fund in that: </P> <Ul> <Li> It is closed to new capital after it begins operating . </Li> <Li> Its shares (typically) trade on stock exchanges rather than being redeemed directly by the fund . </Li> <Li> Its shares can therefore be traded at any time during market opening hours . An open - end fund can usually be traded only at a time of day specified by the managers, and the dealing price will usually not be known in advance . </Li> <Li> It usually trades at a premium or discount to its net asset value . An open - end fund trades at its net asset value (to which sales charges may be added; and adjustments may be made for e.g. the frictional costs of purchasing or selling the underlying investments). </Li> <Li> In the United States, a closed - end company can own unlisted securities . </Li> </Ul>

What is the common discount puzzle from closed-end funds