A closed-end fund is a collective investment scheme with a limited number of shares, which, along with mutual funds and unit investment trusts, form one of three SEC (Securities and Exchange Commission) recognized types of investment companies in the US. Shares in a closed-end fund may be bought through a broker, in the same way as a share of stock.

Unlike open-end funds, in which investors may add as much money to the fund as they want, closed-end funds initially issue a fixed number of shares to the public, after which time shares in the fund are bought and sold on a stock exchange. New shares are rarely issued after the fund is launched; shares are not normally redeemable for cash or securities until the fund liquidates. However, like open-ended mutual funds, closed-end funds are usually run by a funds management company that controls how the money is invested.

The price of a share in a closed-end fund is determined partially by the premium (or discount) placed on it by the market and partially by the value of the investments in the fund. The value of a share is known as the net asset value per share (NAV). This is calculated by adding up the market value of all the fund's underlying securities, subtracting all of the fund's liabilities, and then dividing by the number of shares in the fund. The market price of a fund share is often higher or lower than the NAV: when the fund's share price is lower than NAV it is said to be selling at a discount; when it is higher, at a premium to the NAV.

As investors must take into consideration not only the fund's net asset value but also the premium or discount at which the fund is trading, closed-end funds are considered to be more suitable for experienced investors.