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Have an argument with my trading site, Cornerstone Strategic Value Fund, Inc. ( CLM ) is registered as a Common Stock, Nasdaq dot com. My trading site says it is an ETF. How to solve the dispute? Proof?

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  • did you read cornerstonestrategicvaluefund.com ?
    – MD-Tech
    Nov 4 '15 at 14:37
  • How does the answer impact your investment? And if your broker in fact lists it wrong, and won't change, how does that affect you? Nov 4 '15 at 15:34
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    CLM is listed on NYSE MKT (formerly AMEX), not NASDAQ, so you should consult NYSE MKT for the fund's official registration, not NASDAQ. Also, regardless of how the fund is officially registered, your broker can classify securities however it wants. No amount of proof is necessarily going to change their minds, but you can always move to a different broker if it matters to you that much.
    – dg99
    Nov 4 '15 at 18:12
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CLM is a Closed End Fund. It is a collection of other securities that trades as if it were stock issued by a single company. NASDAQ cares about how it trades, so that would be why they list it as you say they do.

Here is a list of their top 25 holdings:

http://portfolios.morningstar.com/fund/holdings?t=CLM&region=usa&culture=en-US

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  • The following is an excerpt from their prospectus: "The Fund is a diversified, closed-end management investment company. The Fund’s investment objective is to seek long-term capital appreciation through investing primarily in the equity securities of U.S. and non-U.S. companies. There can be no assurance that the Fund’s objective will be achieved." Nov 4 '15 at 15:00
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Ask your trading site for their definition of "ETF". The term itself is overloaded/ambiguous. Consider:

If "ETF" is interpreted liberally, then any fund that trades on a [stock] exchange is an exchange-traded fund. i.e. the most literal meaning implied by the acronym itself.

Whereas, if "ETF" is interpreted more narrowly and in the sense that most market participants might use it, then "ETF" refers to those exchange-traded funds that specifically have a mechanism in place to ensure the fund's current price remains close to its net asset value. This is not the case with closed-end funds (CEFs), which often trade at either a premium or a discount to their underlying net asset value.

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  • Forgetting liberal interpretation of the individual words... ETFs are funds that typically invest in equity that are open-ended... that is, they can grow or shrink in size on a daily basis. A closed-end fund's size is fixed and cannot be changed without a significant capital event that must be approved by shareholders. Nov 5 '15 at 11:09
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I find the reg, at last.

https://www.sec.gov/cgi-bin/browse-edgar?company=Cornerstone+Strategic+Value+Fund&owner=exclude&action=getcompany

Yes, its a common stock.

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Cornerstone Strategic Value Fund, Inc. is a diversified, closed-end management investment company. It was incorporated in Maryland on May 1, 1987 and commenced investment operations on June 30, 1987. The Fund’s shares of Common Stock are traded on the NYSE MKT under the ticker symbol “CLM.”[1]

That essentially means that CLM is a company all of whose assets are held as tradable financial instruments

OR EQUIVALENTLY

CLM is an ETF that was created as a company in its own right.

That it was founded in the 80s, before the modern definition of ETFs really existed, it is probably more helpful to think of it by the first definition as the website mentions that it is traded as common stock so its stock holds more in common with stock than ETFs.

[1] http://www.cornerstonestrategicvaluefund.com/

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    A common misunderstanding is that a closed-end fund (CEF) is a traditional mutual fund or an exchange-traded fund (ETF). A closed-end fund is not a traditional mutual fund that is closed to new investors. And even though CEF shares trade on an exchange, they are not exchange-traded funds (ETFs). - fidelity.com/learning-center/investment-products/…
    – Ross
    Nov 4 '15 at 14:51

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