A closed-end fund is similar to an open-end mutual fund in that both professionally managed investment companies that provide shareholders with a diversified portfolio of securities oriented towards a specific objective. The difference is that closed-end funds typically have a fixed number of shares outstanding, are traded on a stock exchange and can be bought or sold at a market price that may be above or below the net asset value (a premium or a discount) depending on the market demand for the closed-end fund shares.