Open-end and closed-end funds are investment companies that allow investors to pool their capital to invest in a wide range of securities. They provide investors access to professionally managed portfolios to help meet their investment objectives.

Mutual funds

A mutual fund is an investment company that invests in a pool of securities, such as stocks and bonds. Also known as an open-end investment company, a mutual fund continuously offers and redeems shares on a daily basis at the fund’s net asset value.

Exchange-traded funds

Exchange-traded funds (ETFs) are investment companies that hold stocks, bonds, commodities or other securities. Passively managed ETFs track an index, such as the S&P 500 or Dow Jones Industrial Average, or a basket of similar assets such as bonds, commodities or futures contracts. Actively managed ETFs pursue active management strategies. Unlike mutual funds, ETFs can be bought and sold throughout the day.

Closed-end funds

A closed-end fund is also an investment company that pools the assets of its shareholders to invest in a wide range of securities. Unlike a mutual fund, however, a traditional closed-end fund issues a predetermined number of shares, which are typically issued through an initial public offering and listed on a national securities exchange. In contrast, an unlisted closed-end fund issues shares over a longer period, often several years, and provides limited liquidity to investors.

Business development companies

A BDC is a type of closed-end fund that facilitates the flow of capital from individual investors to U.S. middle market companies. They are required to invest at least 70% of their assets in private U.S. companies or U.S. public companies with market values of less than $250 million.

Interval funds

An interval fund is a type of closed-end fund that periodically offers to buy back a defined portion of its shares from shareholders. Unlike traditional closed-end funds, interval fund shares typically do not trade on the secondary market. Instead, shares are repurchased every three, six or twelve months at a price based on net asset value.

Unit investment trusts

Unit investment trusts (UITs) share characteristics with both mutual funds and closed-end funds. Like mutual funds, UITs issue redeemable shares. Like closed-end funds, UITs issue only a fixed number of shares. In contrast to both, UITs have a set termination date.

Learn more: