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A little over 15 years ago, if U.S. based investors wanted to invest in India, one of the few options available to them was The India Fund (IFN) that often traded at a large premium to its underlying assets (as much as 30% if I remember correctly). This was before WisdomTree launched the WisdomTree India Earnings Fund (EPI) and the iShares MSCI India ETF (INDA) started its journey to becoming the largest India focused ETF.
What was the difference between The India Fund and ETFs like those launched by WisdomTree? The India Fund was a closed-end fund, which is an investment company that raises a fixed amount of capital through an initial public offering (IPO) and then trades on an exchange like a stock. After the initial IPO, no more shares are normally issued by the fund. Currently, there are approximately 480 closed-end funds trading on U.S. stock exchanges. Closed-end funds are actively managed and tend to charge higher fees than open-end funds or ETFs.