Closed-end fund

Imagine you and your friends wanted to buy a big toy chest to store all your toys in. You all gathered your allowance money together and asked your parents to buy the chest for you.

Now, instead of just buying one chest, your parents had an idea. They decided to buy lots of different toys and put them all in the chest.

This is kind of like a closed-end fund. A group of people pool their money together and use it to buy lots of different stocks, bonds, and investments. Just like the toy chest, these different investments are all kept together in one place, making it easy to manage.

But here's the difference: once everyone has put their money into the fund, no one else can join in. It's a "closed" group, meaning only a certain number of people are allowed in.

This is different from another type of investment fund, called an open-end fund, where new people can join in or others can leave at any time.

Now, if your toy chest ended up being worth more than the amount of money you all originally put in, your parents could sell it and everyone would make a profit. The same goes for a closed-end fund. If the value of the group's investments goes up, then the fund can be sold and everyone who invested in it can make a profit.

However, closed-end funds can also be risky. If the investments don't do well, then the value of the fund can go down, and you may lose some or all of your money.

So, just like your parents would want to choose the best toys to put in the chest to make it worth as much as possible, the people managing the closed-end fund have to choose their investments wisely to make sure everyone's money is being used in the best way possible.