A company or fund that pools money from many investors and invests that money primarily in securities. Each investment company share represents an investor’s part ownership in the fund’s underlying investments and the income those investments generate.

There are three basic types of investment companies:

Open-end investment companies or open-end funds—which sell shares on a continuous basis, and depending on how structured, can be purchased and sold/redeemed from the fund or, in the case of ETFs, on an exchange;

Closed-end investment companies or closed-end funds—which often sell a fixed number of shares at one time (in an initial public offering) that later trade on secondary markets; 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 that is specified at the time the UIT is created.

Mutual funds are open-end funds. Exchange-traded funds (ETFs) are generally structured as open-end funds but can also be structured as UITs.

Learn more here (mutual funds), here (ETFs), here (closed-end funds), and here (UITs) .