What are closed-ended funds characterized by?

Closed-ended funds are characterized by a fixed number of issued units. This structure means that once the fund is established and the initial public offering is completed, it does not issue new shares or redeem existing shares on a continuous basis as open-ended funds do. Instead, the units of a closed-ended fund are traded on the stock exchange, and the price can fluctuate based on market demand and supply, as well as the underlying value of the fund's assets.

In contrast, options that suggest continuous issuance and redemption of units, high liquidity in trading, or unlimited investor participation describe characteristics of open-ended funds. Open-ended funds allow for ongoing investment by new investors and allow existing investors to redeem their shares at the net asset value (NAV). In essence, understanding the fixed structure of closed-ended funds is essential for distinguishing them from their open-ended counterparts.