Which type of fund issues more units as investors continue to buy in?

The correct choice, an open-ended fund, is characterized by its ability to issue more units whenever investors decide to buy in. This type of fund does not have a fixed number of shares; instead, it continuously creates and redeems shares based on investor demand. When new investors add capital to the fund, the fund issues additional units to accommodate this influx, thereby maintaining a direct relationship between the assets of the fund and the number of shares outstanding.

Open-ended funds are typically structured to provide liquidity to investors, allowing them to purchase or redeem shares at the fund's net asset value (NAV) on a daily basis. This structure contrasts with closed-end funds, which issue a fixed number of shares that are traded on an exchange. Once the initial capital is raised, closed-end funds do not issue new shares or redeem existing ones based on investor demand.

Exchange-traded funds (ETFs) share similarities with open-ended funds in that they can create and redeem units, but they do this through a specific process involving authorized participants rather than directly issuing units to individual investors.

Private equity funds, on the other hand, generally have a fixed capital structure and do not issue new units on a continuous basis. Investors commit capital for a specified period and cannot redeem their