Which type of mutual fund can sell an unlimited number of shares?

An open-end mutual fund is designed to sell an unlimited number of shares to investors. This type of fund continuously creates new shares as new investors buy in, allowing the total number of shares to fluctuate based on demand. This structure provides flexibility for investors, ensuring that they can purchase shares at the current net asset value (NAV) whenever they desire, without a predetermined limit on the number available.

In contrast, a closed-end mutual fund has a fixed number of shares that are issued in an initial public offering (IPO), and investors can only buy or sell these shares on the open market, potentially at prices that differ from the current NAV. An exchange-traded fund also operates differently; while it is traded like a stock on exchanges, it does not sell an unlimited number of shares but instead creates and redeems shares based on market demand through authorized participants. A hedge fund typically has restrictions on investor entry and can limit the amount of capital it raises, which sets it apart from the open-ended structure of the open-end mutual fund.