Legally known as an "open-end company," a mutual fund is one of three basic types of investment companies. While this brochure discusses only mutual funds, you should
be aware that other pooled investment vehicles exist and may offer features that you desire. The two other basic types of investment companies are:
Closed-end funds - which, unlike mutual funds, sell a fixed number of shares at one time (in an initial public offering) that later trade on a secondary market; and
Unit Investment Trusts (UITs) - which make a one-time public offering of only a specific, fixed number of redeemable securities called "units" and which will terminate and
dissolve on a date specified at the creation of the UIT.
Exchange-traded funds (ETFs) - are a type of investment company that aims to achieve the same return as a particular market index. They can be either open-end companies or
UITs. But ETFs are not considered to be, and are not permitted to call themselves, mutual funds.
Hedge funds - is a general, non-legal term used to describe private, unregistered investment pools that traditionally have been limited to sophisticated, wealthy investors.
Hedge funds are not mutual funds and, as such, are not subject to the numerous regulations that apply to mutual funds for the protection of investors . including regulations requiring a certain
degree of liquidity, regulations requiring that mutual fund shares be redeemable at any time, regulations protecting against conflicts of interest, regulations to assure fairness in the pricing
of fund shares, disclosure regulations, regulations limiting the use of leverage, and more.
Funds of hedge funds - a relatively new type of investment product, are investment companies that invest in hedge funds. Some, but not all, register with the SEC and file
semi-annual reports. They often have lower minimum investment thresholds than traditional, unregistered hedge funds and can sell their shares to a larger number of investors. Like hedge funds,
funds of hedge funds are not mutual funds. Unlike open-end mutual funds, funds of hedge funds offer very limited rights of redemption. And, unlike ETFs, their shares are not typically listed on
an exchange.
Learn more about Hedge Funds And Funds Of Hedge Funds