Investment Companies

• INVESTMENT COMPANY is a company (corporation, business trust, partnership, or limited liability company) that issues securities and is primarily engaged in the business of investing in securities.
• An investment company invests the money it receives from investors on a collective basis, and each investor shares in the profits and losses in proportion to the investor's interest in the investment company. The performance of the investment company will be based on (but it won't be identical to) the performance of the securities and other assets that the investment company owns.
• Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base.
• People who buy shares of a mutual fund are its owners or shareholders.
• A mutual can make money from its securities investments in two ways: a security can pay dividends and interest to the fund, or a security can rise in value. The fund passes any dividends, interest or profits on the sale of its portfolio securities, less fund expenses, to shareholders in the form of distributions.
• The money pooled is invested, and the investors share any profits and losses incurred by the company according to each investor's interest in the company.
• Investors contribute money to the investment company by purchasing shares. This includes the purchase of bonds stocks, or real state property, among other examples.
• Types of Investment Companies are open-end, closed-end, and unit investment trusts.
• Open-end means an investment company which is offering for sale or has outstanding any redeemable security of which it is the issuer.
• A closed-end is an investment company that manages closed-end mutual funds and sells a limited number of shares to investors on an exchange by way of an initial public offering.
• Unit investment trusts is a type a investment company that invests in a fixed portfolio of securities, such as stocks or bonds. When the portfolio is sold and the funds are distributed to investors, the UNIT will eventually dissolve on a specific date.
• Equity Fund – shall refer to an investment company with the objective to invest predominantly in or hold equity investments
• Bond Fund or Fixed Income Fund – shall refer to an investment company which invests in fixed income instruments such as bonds, treasury bills, certificates of deposit, promissory notes, bills of exchange, debentures, etc. It should not invest in shares except redeemable preferred shares or share warrants.
• Balanced Fund – shall refer to an investment company that invests in both equity and fixed income instruments. The respective investments in either equity or fixed income shall not be less than thirty five percent (35%) but not more than sixty five percent (65%) of the NAV of the investment company.
• Feeder Fund – shall refer to an MFC that invests at least ninety percent (90%) of its net assets in a single CIS established by another fund manager, asset management company or fund operator, which shall not be a feeder fund.
• Fund-of-Funds – shall refer to an MFC that invests at least fifty percent (50%) of its net assets in more than one (1) CIS established by another fund manager/s, asset management company/ies or fund operator/s
• Index Fund - shall refer to an investment company with an objective of providing investors with a return that replicates or is linked to securities indices as disclosed in its prospectus
• Money Market Funds – shall refer to an investment company that invests in short-term fixed income securities with a portfolio duration of one (1) year or less.
• Multi-asset/Asset Allocation Fund – shall refer to an MFC that invests in a fixed or variable mix of both equity and fixed income instruments, as well as cash and cashequivalents.
• Republic Act No. 2629, also known as the Investment Company Act (“ICA”), and Republic Act No. 8799, also known as the Securities Regulation Code (“SRC”), grant the Commission the authority to prescribe the regulation of investment companies, and to require them to register with the Commission and comply with certain standards including the regular public disclosure of financial condition, investment policies and objectives, and their fund portfolios as well as their pricing and fees.
• The Commission is also authorized to regulate Fund Managers and other parties involved in the operation of investment companies.