Is an ETF (exchange traded fund) the same thing as a closed end fund?

Question

If not, what is the difference please?

Answer 1

A closed end fund is a sub-set of exchange traded funds.  The other member of the set is index funds some of which are ETFs also.  So there are actually two different members of the ETF family,  closed end funds and index funds.  Closed end funds predate index funds by many decades.  The main difference between the two is the closed end funds have a fixed number of shares outstanding.  Index funds can sell additional shares or redeem shares at net asset value.  Closed end funds can sometimes have share buy backs and can sometime have stock rights offerings but in general there is a fixed number of shares. Also closed end funds are actively managed funds whereas index funds are passively managed.

Now for the really big difference.  Closed end funds almost continually sell at either a premium or a discount to net asset value, sometime a significant premium or discount because their price is market based.  The discount or premium can range to 20% or more at times.   The ETF index funds can also sell at a premium or discount but because the supply can be managed by the index fund the variance nomally is within 2%.

This site will provide you with information on most current ETFs.

http://www.etfconnect.com/

Answer 2

No.  ETF means that the investment company puts your money into a broad array of stocks in the stock market.  So broadly spread that you can't get hurt if any one type of stock suddenly goes down.  They aren't picking and choosing stocks on a daily basis so it , in theory, is not as dangerous as normal stock market investing.

Closed end funds have a certain number of investors and no more.  Doesn't have to be an ETF to be closed end.