The buzz the past few trading days has been the issuance of a new gold closed-end mutual fund with some unique features -- redemption (not spiritual), or the ability to take delivery of 400 ounce gold bars, and potential tax advantages.Toronto-based Sprott Asset Management raised $400 million in a Feb. 26 IPO of the Sprott Physical Gold Trust ( PHYS). On March 3, the fund will have cash from settlement and will start buying 400 ounce gold bars. It will do so through bullion dealers in Toronto and London. The gold purchased will be with nearly the full sum of proceeds and delivered as London Good Delivery to the Canadian Mint where it will be stored. As a closed-end fund investors can expect the PHYS to trade at a premium or discount to NAV (Net Asset Value) at any time. Further fund management has indicated a desire to sell new shares periodically (they'd like to raise an additional $600 million) as is typical of other closed-end funds. New share issues would be dilutive to existing holders, causing shares to fall if only temporarily. This often leads to some short-term frustration since this frequently happens just when the NAV and premium for existing shares is rising. Demand must be strong in this case and fund management will take advantage of it, which is a business decision. Higher fees are also consistent with closed-end funds versus ETFs. The annual fee for PHYS is 0.60% versus popular gold ETFs like the SPDR Gold Trust ETF ( GLD) and the iShares COMEX Gold Trust ETF ( IAU) with management fees of 0.40%. What separates PHYS from other products like Central Gold Trust ( GTU) and Central Fund Canada ( CEF) is the redemption feature plus perhaps certain tax advantages. The tax advantage per the prospectus states: "Any gains realized on the sale of units by an investor may be taxable as long-term capital gains (at a maximum rate of 15% under current law)". This would then avoid the 28% tax on collectables also under current law. There may be circumstances where this can all change obviously. The redemption feature works as follows: An investor in the fund may take physical delivery of a minimum of one 400 ounce bar by contacting the fund on the 15th of each month outlining the details of the delivery request including number of bars and so forth. It's up to the holder to make arrangements for delivery and this can be cumbersome.