The 2012 Survey of Closed-End Funds’ Literature

Abstract

This survey deals with the literature on closed-end funds (CEFs) in general and theories of discounts in particular. New theories have emerged over the past 10 years that reveal CEFs to be an important and efficient organizational device. Among the topics reviewed are liquidity transformation, the effects of tax overhang, the importance of managerial fees, the provision of leverage services, the impact of the potential irrationality of small investors on discounts, and IPO issues.

Keywords: closed end, discount, investor sentiment, liquidity transformation