Which of the following is a feature of mutual funds that distinguishes them from closed-end funds?

The distinct feature of mutual funds that sets them apart from closed-end funds is the continuous issuance and redemption of units. Mutual funds operate with a structure that allows investors to buy and sell shares at the net asset value (NAV) directly through the fund itself. This means that the fund can continuously create new shares when investors purchase and redeem shares when investors leave.

In contrast, closed-end funds have a fixed number of shares issued during their initial public offering, and thereafter, shares are traded on the stock market like any other stock, often at prices that deviate from their NAV. This key difference in how shares are bought and sold is what fundamentally distinguishes mutual funds from closed-end funds, making continuous issuance and redemption a defining characteristic of mutual funds.

This aspect of mutual funds contributes to higher liquidity for investors since they have the ability to redeem their units at any time based on the current NAV, providing greater accessibility and flexibility in managing their investments.