A mutual fund can be either open-ended or close-ended. The difference between the two is in the way each operates after the new fund offering. A close-ended scheme operates like any other public entity whose shares are traded on the stock market. Thus, to buy or sell units of a close-ended scheme, you have to transact on the BSE or on the NSE. That’s why the market price of its units is also determined by supply and demand for its units (apart from quality and performance of its portfolio).
On the contrary, open-ended funds continue to price, sell and repurchase shares after the new offer on the basis of the NAV. The mutual fund will sell additional units of the fund at the NAV (at par or adjusted for expenses), or buy back (redeem) shares of the fund at the NAV (at par or adjusted for expenses). That’s why the unit capital of open-ended funds can fluctuate on daily basis. But a close-ended fund may or may not offer more units after its listing. It may or may not also repurchase its units. That is up to the issuing mutual fund to decide.