What is an investment company? What are its different types

 Public corporation organized to invest in large blocks of securities of diverse firms, and to obtain its capital from issues of shares or units. Investment companies give  a  small investor the  advantage of  a  full  time professional investment management, and a very much wider spread of risk that it would have been otherwise possible.

 

 They are divided into three major types:

1.Open-end funds/ mutual funds- that have a floating number of issued shares, and sells or redeem their shares at their current net asset value.

2.Closed-end funds/ investment trusts- that can sell only a fixed number of shares that are traded on stock exchanges, usually at a discount to their net asset value.

3.Unit investment trusts / unit trusts- that sells their redeemable securities which represent interests in the securities held by the trust in its investment portfolio.