Investment Companies and Alternative Investments
KINDS OF INVESTMENT COMPANIES
In popular usage, the term mutual fund often is used to refer to any kind of investment company. Actually, however, there are three basic kinds of investment companies: those that sell face-amount certificates (the issuer promises to pay the investor a stated amount at maturity or a surrender value if tendered early), those that sell unit investment trusts (the fund invests in a fixed portfolio of securities), and so-called management companies (which hold a portfolio of securities that are actively managed by an investment manager). The most important of these are the management companies, which, in turn, can be classified as closed-end funds and open-end funds ...