The amount of capital in a closed-end fund is stable once the offering is closed to new investors, which is an advantage for portfolio managers and shareholders alike. The portfolio manager(s) can invest without needing to invest large cash inflows at inopportune market prices. Conversely, they are not forced to sell portfolio holdings to meet redemption requests from shareholders (potentially resulting in tax consequences). Since shares are bought and sold among investors on open exchanges, portfolio management is not hindered by cash flows into or out of the fund.
The stable asset structure is particularly advantageous for funds investing in highly specialized areas such as less liquid securities or emerging markets, venture capital, real estate or private placements.