What role do open-ended funds play in the investment landscape?

Open-ended funds play a significant role in the investment landscape as they allow for a continuous inflow of capital. This means that investors can purchase or redeem shares of the fund at any time at the current net asset value (NAV). This flexibility enables investors to enter or exit the investment based on their financial goals and market conditions, providing them with liquidity that is often attractive to new and existing investors.

Since open-ended funds do not have a capped number of units, they can accommodate more investors and their contributions, which can lead to growth in the fund's assets under management. This growth allows the fund manager the ability to invest in a broader range of securities and strategies, fostering a dynamic investment approach.

The other options highlight characteristics that are not applicable to open-ended funds. For instance, restricting the number of units or creating a fixed portfolio of assets describe characteristics of closed-end funds or other types of investments. Similarly, the notion that they only invest in government securities is an inaccurate portrayal since open-ended funds can invest in a variety of asset classes, including equities, corporate bonds, and a mix of instruments based on the fund's specific strategy.