Mutual fund companies sell mutual funds. Mutual funds are collective investments that collects money from many investors and puts it in stocks, bonds, short-term money market investments, and/or other securities
Legally known as an "open-end company," a mutual fund is one of three basic types of investment company. The two other basic types are closed-end funds and Unit Investment Trusts (UITs).
Mutual fund companies have several characteristics in common:
• They allow investors purchase mutual fund shares from the fund itself (or through a broker for the fund), but are not able to purchase the shares from other investors on a secondary market, such as the New York Stock Exchange or Nasdaq Stock Market.
• Their mutual fund shares are "redeemable." This means that when mutual fund investors want to sell their fund shares, they sell them back to the fund (or to a broker acting for the fund) at their approximate per share NAV, minus any fees the fund imposes at that time (such as deferred sales loads or redemption fees).
• Mutual fund companies sell their shares continually, although some funds will stop selling when they become too large.
• Mutual fund companies’ investment portfolios are managed by investment advisers registered with the SEC.
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