I am confused about the concept why ETFs are similar to closed-end funds?
ETFs investors are able to withdraw and get stocks back ,is it not similar to open-end funds?
They’re both similar in that ETFs and closed-end funds are pooled investment vehicles that are publicly traded just like a stock. Also, both can trade at a premium or discount to their underlying assets.
When you sell an ETF or open-ended fund you have the option to receive your distribution in kind. That is, you get the basket of stocks instead of cash. Close-ended funds - to my knowledge - do not offer in kind distributions, unless perhaps they did a stock dividend but I don’t think that happens nor is that what you’re asking about.
Basically, there’s very little difference between a single stock and a close-end fund. They both go through an IPO, trade on an exchange (or OTC), and when you sell you get cash.
ETFs and open-end mutual funds don’t have IPOs. Units can be created on demand and on an ongoing basis.
ETFs and close-end funds give you the option of taking cash or securities when you sell. The latter isn’t practical for most individual investors, but is sometimes handy for institutions to avoid trading costs and minimize market risk.