Investment Company Structure

What this video covers

• The three statutory classes under the Investment Company Act (ICA): face-amount certificate companies, unit investment trusts (UITs), and management companies, and why open-end and closed-end are subclassifications, not statutory classes
• The 75/5/10 test for a diversified management company and what happens if a fund falls short of the 75% threshold
• Forward pricing mechanics for open-end mutual funds, including the 4:00 p.m. Eastern Time (ET) cutoff and why orders at 4:02 p.m. ET receive tomorrow's net asset value (NAV)
• The difference between redeemable shares (open-end funds and UITs) and non-redeemable shares (closed-end funds), and why this distinction matters for investor liquidity
• Why exchange privileges within a fund family are still taxable events even when no new sales charge applies
• How closed-end funds trade at premiums or discounts to NAV, why discounts are structural not distress signals, and the 300% asset coverage requirement for closed-end fund debt
• Why UITs have zero active management, no investment adviser, and no board of directors, yet still issue redeemable units at NAV until termination
• ETF creation units of 50,000 shares, the role of authorized participants in keeping market price tethered to NAV, and why in-kind creation makes ETFs tax-efficient