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A closed-end fund is a fund where the investing shareholders do not have the right to redemption at their sole option (although the directors of the fund could approve a redemption at anytime if a valuation could be calculated and liquid funds were available) - a closed-end fund would either have a fixed term life or would redeem its shares at anytime that its stated investment objective had been achieved.
The distinction between a closed-end and open-end fund is important as only open-end funds are required to be regulated by the BVI-FSC, closed-end funds are not subject FSC regulation. Many clients specifically want a regulated entity, so an open-end fund would be their only option. If a closed-end was specifically required then it would not be an FSC regulated entity and the company may not use the word "Fund" it is name. A closed ended fund is unregulated and not covered by the Mutual Funds Act in BVI. Closed ended funds are often used as Hedge Funds, Private Equity Investment Companies etc.