ESTOQUE, Joan Mae P.

BA 108 (MWF, 10:00- 11:00am)

Capital Market BSBA-FIN 2

Investment Companies

An investment company is a type of company designed to invest pooled capital from investors
into financial securities. These securities may be stocks, bonds or any other type of asset class.
Investment companies are business entities, both privately and publicly owned, that manage, sell and
market funds to the public. The main business of an investment company is to hold and manage
securities for investment purposes. An investment company can be a corporation, partnership, business
trust or limited liability company (LLC).

Investment companies are categorized into three types: closed-end funds, mutual funds (or
open-end funds) and unit investment trusts (UITs). A closed-end fund is a portfolio of pooled assets that
raises a fixed amount of capital through an initial public offering (IPO) and then lists shares for trade
on a stock exchange. An open-end fund is a diversified portfolio of pooled investor money that can
issue an unlimited number of shares. The fund sponsor sells shares directly to investors and redeems
them as well. These shares are priced daily, based on their current net asset value (NAV). A unit
investment trust (UIT) is an investment company that offers a fixed portfolio, generally of stocks and
bonds, as redeemable units to investors for a specific period of time.

https://mutualfunds.com/education/brief-guide-investment-companies/
https://www.investopedia.com/terms/u/uit.asp
https://www.investopedia.com/terms/c/closed-endinvestment.asp
https://www.investopedia.com/terms/o/open-endfund.asp