Closed-end mutual funds differ from open-end mutual funds and ETFs in several ways. Closed-end funds issue a fixed number of shares through an initial public offering (IPO), meaning that once the shares are sold, new shares are not continuously offered to investors. This is in contrast to open-end mutual funds and ETFs, which can create or redeem shares on a daily basis. Furthermore, closed-end funds trade on exchanges like stocks, and their share prices can deviate from the net asset value (NAV), leading to them trading at a premium or discount. This price deviation is a key distinguishing feature of closed-end funds.

Option A is incorrect. Closed-end mutual funds do not allow for daily redemptions at the NAV. As mentioned earlier, closed-end funds issue a fixed number of shares through an IPO and do not continuously offer new shares to investors. Therefore, daily redemptions at the NAV are not possible.

Option B is incorrect. The level of management, whether active or passive, is not a defining characteristic of closed-end funds. Both actively managed and passively managed funds can be structured as closed-end funds. The key distinguishing feature of closed-end funds is their fixed number of shares and trading on exchanges, not the management style.

Option D is incorrect. Closed-end funds can be either actively managed or passively managed. While some closed-end funds may indeed seek to replicate the performance of a specific market index, this is not a universal characteristic. The management style of a closed-end fund can vary, and it is not solely limited to passive management.