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.
In United States securities law, there are at least four types of investment companies:
- Open-End Management Investment Companies (mutual funds)
- Closed-End Management Investment Companies (closed-end funds)
- Hedge Funds
- UITs (unit investment trusts)
A fifth and lesser-known type of investment company under the Investment Company Act of 1940 is a Face-Amount Certificate Company.
Also popular are private investment funds, which are simply private companies that make investments in stocks or bonds, but are limited to under 100 investors, are private and are not regulated by the SEC. These funds are often composed of very wealthy investors.
Famous quotes containing the words investment and/or company:
“The only thing that was dispensed free to the old New Bedford whalemen was a Bible. A well-known owner of one of that city’s whaling fleets once described the Bible as the best cheap investment a shipowner could make.”
—For the State of Massachusetts, U.S. public relief program (1935-1943)
“We noticed several other sandy tracts in our voyage; and the course of the Merrimack can be traced from the nearest mountain by its yellow sand-banks, though the river itself is for the most part invisible. Lawsuits, as we hear, have in some cases grown out of these causes. Railroads have been made through certain irritable districts, breaking their sod, and so have set the sand to blowing, till it has converted fertile farms into deserts, and the company has had to pay the damages.”
—Henry David Thoreau (1817–1862)