What is a key feature of closed-end funds compared to open-end funds?

Closed-end funds are characterized by their ability to issue a fixed number of shares, which are bought and sold on an exchange, similar to stocks. This means they do not continuously offer new shares to investors as open-end funds do. Instead, once the shares are initially sold to investors through an initial public offering (IPO), they are then traded among investors on the secondary market without the fund needing to issue or redeem shares constantly.

This feature leads to the distinctive trading dynamics of closed-end funds, where their market prices can fluctuate based on supply and demand rather than just the net asset value (NAV) of the fund's holdings, which is the primary factor affecting open-end fund prices. Thus, sharing this fundamental structure sets closed-end funds apart, particularly regarding how shares are managed and traded in the market.

While minimum investments and management fees can vary widely between different funds, and daily trading is a characteristic of open-end funds regarding redeeming shares at NAV, those factors do not uniquely highlight the functional differences between closed-end and open-end structures like the lack of continuous share offerings does.