Introduction

Investment Companies:
An investment company is a financial institution that invests pooled
money from various investors in a diversified portfolio of securities such as stocks, bonds, and
real estate. The primary goal of investment companies is to generate returns for their investors
while spreading the investment risks across various assets. Investment companies come in
various forms, such as mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit
investment trusts. Mutual funds are the most common type of investment company, where
investors pool their money to purchase a portfolio of various securities.
Three Types of investment companies:
1. Mutual Funds: These are investment companies that pool money from multiple investors and
invest in a diversified portfolio of securities, such as stocks, bonds, and money market
instruments Examples of mutual funds in Pakistan are NBP Mutual Fund and UBL Funds.

2. Closed-End Funds: Closed-end funds issue a fixed number of shares through an initial public
offering and trade on stock exchanges like regular stocks. The shares of closed-end funds are
traded at market prices, which can be higher or lower than the net asset value per share.
Examples of closed-end funds in Pakistan are First Capital Investments Limited and JS
Investments Limited.

3. Unit Investment Trusts (UITs): UITs are investment companies that purchase a fixed portfolio of
securities and hold them until maturity. UITs issue units to investors, and the income or capital
gains from the underlying securities are distributed to unit holders. An example of a UIT in
Pakistan is National Investment Trust (NIT).