A mutual fund is an investment company that continually issues redeemable shares without limit (open end) upon investor demand, typically through a registered broker-dealer for the fund.  Their net asset value (NAV) per share is computed after receipt of the purchase or redemption order and publicly reported at least once daily.

A US open-end investment company is a corporation.  As a publicly held corporation, it has a board of directors that oversees fund management, operations, performance and compliance on behalf of its shareholders, who have the right to vote on corporate matters.  They are prohibited from using leverage or issuing preferred stock or senior debt.

Mutual Fund Purchase Process Flow
This illustrates the flows of cash from the buyer to the fund company and from the fund company to the capital market and the flow of securities to the fund company and share from the fund company to the buyer when purchasing mutual funds.

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This illustrates the flows of cash from the buyer to the fund company and from the fund company to the capital market and the flow of securities to the fund company and share from the fund company to the buyer when purchasing mutual funds.

A SICAV (société d'investissement à capital variable) is similar to a US open-end fund (mutual fund) and the most common form of collective investment scheme in Western Europe.  Unlike US mutual fund shareholders, SICAV shareholders have no voting rights.

Any management company that issues a fixed number of non-redeemable shares is a closed-end investment company (CEF).  The shares are issued through a registered broker-dealer in a single underwritten public offering and then trade freely in the secondary market at a premium or discount to the fund’s net asset value.

A CEF can undertake follow-on offerings or at-the-market offerings to raise additional capital.  They may execute stock repurchase programs or periodically tender for shares to reduce the discount at which shares are trading.  They may also convert to an interval fund or an open-end fund, subject to shareholder approval.

Unlike mutual funds, the investment strategies of CEFs may involve the use of leverage and investments in illiquid assets.  CEFs can be leveraged and issue debt and preferred stock up to 50% and 100% of net assets, respectively, with no limit on the investment in illiquid securities.  This makes them generally more volatile and risky than mutual funds.

The European SICAF (société d'investissement à capital fixe) is similar to a US closed-end fund.  Like with the SICAVs, investors in SICAFs have no voting rights, because the investment companies are not in corporate form.