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Investment Firms

An investment firm is an organization (limited liability firm, business concern, partnership or corporation) that issues investment securities and is mainly engaged in the dealing of investment securities. The performance of an investment firm depends on the performance of the assets and other securities that it owns.

In general, an investment firm is termed as a financial institution, which sells stocks and shares to individuals and invests currency in securities of other companies. By putting money in aid of their shareholders, an investment firm is liable to their gains and losses. Investment firms are also termed as Investment Companies and are very much correlated to the Investment Bank concepts.

Investment Banks assist government and private bureaus in respect of raising money through issue of securities and selling them into the capital market. They also assist the private and public financial corporations in arranging funds from the primary market with the assistance of both debts and equities. In addition, they offer valuable guidance and tips in acquisitions and merger of firms and other financial dealings.

U.S. securities of SEC (Securities and Exchange Commission) law classify three different kinds of investment firms namely Mutual Funds, UIT (Unit Investment Trusts) and Closed-End Investment Company.

Kinds of Investment Firms - In Brief:

Mutual fund companies focus on mutual funds that are collective pool of assets. They bring huge money from investors and invest in share-market, bonds, equities, money market securities and instruments. There are different categories of mutual funds available for investors such as equity funds, money-market funds, hedge funds and open-end funds. Mutual fund companies are the kind of investment firms where financial manager trades in the firmís primary securities, actual investment profits, bonus and corresponding losses.†

Unlike a mutual fund company, the Unit Investment Trusts is a United States investment firm, which has fixed security portfolios. These portfolios are made for some specific period. A Unit Investment Trust (UIT) does not have an investment adviser, corporate officer or board of directors, to offer advice or guidelines during the lifespan of the trust.

A closed-end fund implies collective pool of assets but with limited number of stocks or shares that cannot be generated until the funds liquidate.


Each kind of investment firm has its own distinctive features. For instance, UIT and mutual fund shares are exchangeable. Meaning, while investors desire to sell their shares, they can easily sell them back to the Trust or Fund Company or to brokers acting on behalf of Trust or Fund Company at the approximate Net Asset Value. On the contrary, close-end fund shares are not exchangeable. Thus, those investors who want to sell shares can sell them to the secondary market investors at a predetermined price by the market. Moreover, there are differences within each kind of investment firms in terms of exchange-traded funds, bond funds, stock funds, money market funds, interval funds and index funds. Investment firms such as Merrill LynchComputer Technology Articles, ING Investments and JP Morgan are some of the renowned investments firms all round the world.

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John Elton owns and operates a Best Penny Stocks Picks website to help other investors with their stock decisions. He also operates a Home Based Business earn money online site to help entrepreneurs gain experience and wealth.

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