Closed-end funds of closed-end funds could help narrow discounts industry-wide if more firms take to the concept.

Cohen & Steers has filed with the Securities and Exchange Commission for a closed-end fund that invests mainly in other closed-end funds (www.fundaction.com, 10/27). Observers say a recent SEC proposal to speed up approval for funds of funds has renewed interest in the concept.

While there are other offerings that buy closed-end funds, including unit investment trusts, an infusion of several billion dollars through a number of new closed-end funds of closed-end funds could cut discounts by increasing demand for the finite number of closed-end fund shares.

The funds would mostly buy funds trading at a wide discount. The amount of money that the launches of several such funds could bring to the market is the driving factor because a relatively small number of investors now play in the market.