An investment company is a company whose main business is holding securities of other companies purely for investment purposes. The investment company invests money on behalf of its shareholders who in turn share in the profits and losses.
- Open-End Management Investment Companies (mutual funds)
- Closed-End Management Investment Companies (closed-end funds)
- UITs (unit investment trusts)
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 is private investment companies, which are simply private companies that make investments in stocks or bonds, but are limited to under 100 investors and are not regulated by the SEC. These funds are often composed of very wealthy investors.
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