An investment company is a legal entity that manages an investment fund whose normal business is to provide investment services, as they are understood in a particular jurisdiction, to third parties. Investors trust their free funds to investment companies, allowing to manage them and invest in specific funds for profit. The finances received from investors form an investment portfolio. The resources included in the portfolio are usually invested in securities, stocks, bonds, etc.
Types of investment companies
In general, investment companies can be classified according to the types of funds they manage and/or the funds they create. According to the objects of investment, investment funds can be divided into stock funds, bond funds, mixed funds.
However, these funds may be divided into many different categories according to the laws and local customs. For more information on this subject, you can read our article on investment funds.
An investment company can be represented as a superstructure of funds — i.e. a company that can provide complex services related to investments, including investment portfolio management or investment consulting.
It’s also worth to add that the activities of investment companies provide for a mandatory licensing procedure in most jurisdictions. If the company (data about it) is not in the register of the relevant regulator, caution is recommended while interacting with it.
Origin of the term. It is generally accepted that back in the 17th century, European financial institutions performed a number of functions specific to investment companies in the modern sense. One of the first full-fledged investment trusts was created by a merchant and broker from the Netherlands Adriaan van Ketwich in 1774, and already at the end of the 19th — beginning of the 20th centuries such organizations began to appear in large numbers in the United Kingdom and the USA. In the post-Soviet space, investment companies started to open only in the early 90s of the 20th century.
