Closed-End Mutual Funds? Which is the Correct Term?
“Closed end mutual fund” is a misnomer. Three basic types of investment companies are recognized legally:
- Mutual funds, also called open-end companies.
- Closed-end companies, also called closed-end funds.
- Unit investment trusts.
Therefore, the correct term is closed-end fund, without the mutual. Closed-ended fund is also acceptable.
Sometimes close-ended fund is used, even close-end fund. I wasn’t sure about the validity of those ones, so I googled a few authoritative investment sites, that have no user-generated content, to see how frequently (according to Google) each variation is used:
Site | Closed-end | Closed-ended | Close-end | Close-ended |
SEC | 975 | 1 | 0 | 0 |
NYSE | 405 | 2 | 0 | 0 |
CME | 9 | 0 | 0 | 0 |
LSE | 127 | 32 | 0 | 1 |
The table shows the instances for each of the indicated terms, followed by fund or funds (I added together both alternatives). The sole appearance of close-ended fund(s) is due to what an investment company filled-in in a form, so I wouldn’t take that as coming from an utmost authority.
My conclusion is that closed-end fund(s) is the preferred term, while closed-ended fund(s) is also acceptable.
By the way, exchange-traded funds (ETFs) are either mutual funds or unit investment trusts.
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor