Definitions of Investment Companies

What this video covers

• Why the MUF acronym matters, and why any pooled vehicle that is not a management company, unit investment trust (UIT), or face-amount certificate company falls outside the Investment Company Act of 1940 (ICA)
• Why passively managed index funds are still management companies, since the definition hinges on exclusion from the other two types, not on active management
• The structural divide between open-end funds (continuous issuance and redemption at net asset value (NAV), no share cap) and closed-end funds (exchange-traded, no ongoing sales at NAV, though follow-on or rights offerings are possible)
• Why UITs have no board of directors, no investment adviser, no active management, and a fixed portfolio with a mandatory termination date
• Why face-amount certificate companies are virtually extinct in practice but still highly testable as the third legal category under the ICA
• The small-investor private-fund exemption (100 or fewer beneficial owners) and the qualified-purchaser private-fund exemption (no holder cap, but every investor must be a qualified purchaser)
• Why both private-fund exemptions require absolutely no public offering, and why exemption from ICA registration never exempts anyone from anti-fraud liability