Which type of mutual fund offering allows for continuous share offerings?

An open-ended mutual fund is designed to allow for continuous share offerings, which means that investors can buy and sell shares directly from the fund at any time. This structure facilitates the inflow and outflow of capital, making it possible for the fund to issue new shares as more investors wish to buy in and redeem shares when investors want to sell.

In contrast, a closed-end fund issues a fixed number of shares through an initial public offering (IPO) and then trades on the secondary market. This means that once the shares are issued, new shares cannot be created or redeemed by the fund directly. Exchange-traded funds (ETFs) also trade on the secondary market, and while they may have a mechanism for creating and redeeming shares through authorized participants, they do not continuously issue new shares to the general public in the same way an open-ended fund does. A unit investment trust (UIT) typically has a fixed portfolio and does not allow for continuous share offerings; once the units are sold, they cannot be redeemed for the duration of the trust’s existence.

Thus, the defining characteristic of an open-ended mutual fund is its continuous offering structure, which distinguishes it from other types of mutual fund offerings.