An investment company is a financial institution principally engaged in holding, managing and investing
securities. These companies in the United States are regulated by the
U.S. Securities and Exchange Commission and must be registered under the
Investment Company Act of 1940. Investment companies invest money on behalf of their clients who, in return, share in the profits and losses.
Investment companies are designed for long-term investment, not
short-term trading.
Investment companies do not include brokerage companies, insurance companies, or banks.
In
United States securities law, there are at least three types of investment companies:
* Open-End Management Investment Companies (
mutual fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICA ...
s)
*Face amount certificates companies: very rare.
*Management companies
* Closed-End Management Investment Companies (
closed-end funds)
* UITs (
unit investment trusts): only issue redeemable units.
In general, each of these investment companies must register under the
Securities Act of 1933 and the
Investment Company Act of 1940. A fourth and lesser-known type of investment company under the
Investment Company Act of 1940 is a
Face-Amount Certificate Company. A major type of company not covered under the
Investment Company Act 1940 is private investment companies, which are simply private companies that make investments in stocks or bonds, but are limited to under 250 investors and are not regulated by the SEC.
"Investment Clubs and the SEC"
''sec.gov'', Modified January 16, 2013. These funds are often composed of very wealthy investors.
See also
* Holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
* Investment trust
* Private equity firm
References
Investment management
Types of business entity
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