Investors in an open-ended fund give a fund manager their money to invest on a collective basis. The term "open-ended" means that new shares can be issued in accordance with demand for them. When an investor wants to put money into the fund, new shares are issued. When they sell, the shares are "redeemed". The buying and selling price of an open-ended fund always reflects the value of the underlying portfolio (minus any costs involved).
One problem with using open-ended funds to invest in illiquid assets such as commercial property, for example is that if investors demand their money back in large numbers, then the fund will be unable to liquidate its holdings rapidly enough to satisfy redemption requests. This is why many commercial property funds had to halt redemptions during the panic that followed Britain's vote to leave the European Union in 2016.This is not a pleasant experience for investors who rightly expect to be able to access their money as and when they want to.
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