Investment Firms

In general, an investment firm istermed as a financial institution, which sells stocks and shares to individualsand invests currency in securities of other companies. By putting money in aidof their shareholders, an investment firm is liable to their gains and losses.Investment firms are also termed as Investment Companies and are very muchcorrelated to the Investment Bank concepts.

Investment Banks assistgovernment and private bureaus in respect of raising money through issue ofsecurities and selling them into the capital market. They also assist theprivate and public financial corporations in arranging funds from the primarymarket with the assistance of both debts and equities. In addition, they offervaluable guidance and tips in acquisitions and merger of firms and otherfinancial dealings.

U.S. securities of SEC(Securities and Exchange Commission) law classify three different kinds ofinvestment firms namely Mutual Funds, UIT (Unit Investment Trusts) andClosed-End Investment Company.

Kinds of Investment Firms - In Brief:

Mutual fund companies focus onmutual funds that are collective pool of assets. They bring huge money frominvestors and invest in share-market, bonds, equities, money market securitiesand instruments. There are different categories of mutual funds available forinvestors such as equity funds, money-market funds, hedge funds and open-endfunds. Mutual fund companies are the kind of investment firms where financialmanager trades in the firm’s primary securities, actual investment profits,bonus and corresponding losses.?

Unlike a mutual fund company, theUnit Investment Trusts is a United States investment firm, which has fixedsecurity portfolios. These portfolios are made for some specific period. A UnitInvestment Trust (UIT) does not have an investment adviser, corporate officeror board of directors, to offer advice or guidelines during the lifespan of thetrust.

A closed-end fund impliescollective pool of assets but with limited number of stocks or shares thatcannot be generated until the funds liquidate.

Overview:

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Each kind of investment firm hasits own distinctive features. For instance, UIT and mutual fund shares areexchangeable. Meaning, while investors desire to sell their shares, they caneasily sell them back to the Trust or Fund Company or to brokers acting onbehalf of Trust or Fund Company at the approximate Net Asset Value. On thecontrary, close-end fund shares are not exchangeable. Thus, those investors whowant to sell shares can sell them to the secondary market investors at a predeterminedprice by the market. Moreover, there are differences within each kind ofinvestment firms in terms of exchange-traded funds, bond funds, stock funds,money market funds, interval funds and index funds. Investment firms such asMerrill Lynch, ING Investments and JP Morgan are some of the renownedinvestments firms all round the world.