A closed-end fund is a mutual fund with a fixed pool of assets and a fixed number of shares.
The value of the closed-end fund is determined by market demand for the shares of the fund. Therefore, the current price of a closed-end fund can be greater or less than the underlying value of the fund's assets. Most closed-end funds trade at a discount but a few high-income funds trade at a premium. In contrast the value of a open-end mutual fund is determined by the value of its underlying assets so investors can not buy an open-end fund at a discount.
Buying at a discount can be very beneficial when you by a fund for income. For example, a fund that pays a $0.50 dividend has a yield of 5 percent if you pay $10. But if you buy it at $9, the yield is 5.56 percent.
Closed-end funds trade on major stock exchanges and you purchase a closed-end fund through a broker and pay a commission. Closed-end funds charge fees for professional management and operations so check the fee schedule before you buy a fund. Fees for closed-end funds tend to be lower than fees for comparable open-end mutual funds.