PPT Slide: Distinctions Between Open-End and Closed-End Funds

Distinctions Between Open-End and Closed-End Funds PPT

This PPT slide, part of the 11-slide Real Estate Investment Trust (REIT) Guide PowerPoint presentation, delineates the distinctions between open-end and closed-end funds, particularly in the context of private equity real estate (PERE) funds. It begins by defining closed-end funds (CEFs) as investment vehicles with a fixed number of shares, which are not typically issued after the fund's launch. This structure means that investors acquire shares primarily from other investors rather than directly from the fund itself, which contrasts with open-end funds where shares can be created or redeemed at any time.

The pricing mechanism for CEFs is highlighted, indicating that share prices are influenced by the underlying value of the fund's investments and market-driven premiums or discounts. The total value of the fund's assets divided by the number of outstanding shares determines the net asset value (NAV) per share. This pricing dynamic is crucial for investors to understand, as it can significantly affect their investment outcomes.

The slide also notes the legal terminology in the U.S., where CEFs are referred to as "closed-end companies," and mentions similar structures in other jurisdictions, such as investment trusts in the UK and listed investment companies in Australia.

Furthermore, the slide introduces opportunity funds, categorized as value-added funds, which are a prominent type of PERE fund. It emphasizes their focus on high-risk, high-return investment strategies, driven by the expertise of General Partners in identifying lucrative real estate opportunities. This segment underscores the potential for substantial returns, making it an attractive option for investors willing to navigate the associated risks.

This slide is part of the Real Estate Investment Trust (REIT) Guide PowerPoint presentation.

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