Research on closed-end funds in emerging markets has raised many issues, including the eff ect on discounts* of restrictions on foreign investment (Bonser-Neal et al., 1990; Nishiotis, 2004), the role of such funds as vehicles for portfolio diversifi cation for U.S. investors (Chang et al., 1995; Bekaert and Urias, 1996; Eun et al., 2002), information lags and inertia in the response of prices to net asset value (NAV) movements (Klibanoff et al., 1998; Frankel and Schmukler, 2000), and comovement with the U.S. stock market or with discounts on domestic closed-end funds (Hardouvelis et al., 1994; Bodurtha et al., 1995).