Let’s clear something up — not all funds are created equal. You’ve probably heard of mutual funds and closed-end funds, and maybe someone even told you they’re “basically the same.” They’re not. Not even close.

Here’s the no-BS breakdown.

This is your classic mutual fund. It’s “open” because new shares can be created or redeemed every day. You invest directly with the fund company, not through the market.

Price: Always based on NAV (Net Asset Value), calculated at the end of each trading day. No discounts. No premiums.

Liquidity: You can cash out anytime the market’s open, and the fund company literally redeems your shares for cash.

Flow of Money: Investors move in and out freely — the fund grows or shrinks with investor demand.

Example: Think Fidelity Contrafund or Vanguard 500 Index Fund. Boring. Reliable. Steady as she goes.

Bottom line:

Closed-end funds (CEFs) are built different. When they launch, they issue a fixed number of shares in an IPO — just like a company going public. After that, those shares trade on an exchange, like stocks.

Price: Whatever the market says. Could be above NAV (premium) or below NAV (discount) — and it often is.

Liquidity: You trade them like any stock — intraday, any time.

Leverage: Many closed-end funds borrow money to juice returns. When markets swing, these things move hard — up or down.

Flow of Money: New investors don’t give money to the fund; they buy existing shares from other investors.

Bottom line: