The performance persistence of closed-end funds.

The purpose of this study is to extend the research on mutual fund performance persistence to closed-end funds. Because closed-end funds trade at market prices different from net asset value (NAV) they are used to test both the performance persistence of their NAV and market price returns. While research has assessed the performance persistence of open-end funds, it has not assessed the performance persistence of closed-end funds. Yet, the unique characteristics of closed-end funds allow stronger arguments for their persistence than the arguments previously submitted for open-end funds. The characteristics that can potentially cause closed-end fund return persistence to be different from open-end fund return persistence include investor sentiment, restrictions on liquidity of underlying assets and cash holdings, and performance pressure on fund managers.