The U.S. Securities and Exchange Commission (SEC) categorizes investment companies into three types: mutual funds (also known as “open-end” companies), closed-end funds and unit investment trusts (UITs).
Mutual funds:
With a mutual fund, you pool money with other investors. Money goes into stocks, bonds, money market instruments and other securities.
Closed-end funds:
Closed-end investment companies put money raised during an initial public offering (IPO) into stocks, bonds and other securities. Shares are later available in fixed releases.
UITs:
A unit investment trust raises money from multiple investors in a one-time public offering. Investments are then made into stocks, bonds and other securities.
Exchange-traded funds (ETFs) can be categorized as open-end funds or UITs.