What is a Diversified Investment Company?
Diversified investment companies are unit investment trusts or mutual funds that are structured to allow investment in a wide range of securities and various types of businesses. In the case of a mutual fund, the diversified investment company can be a closed fund or an open-ended fund. In the United States, there are specific regulations that govern how much of any given investment can be held by a diversified investment company. The main law or regulation that defines the function of a diversified investment company is known as the Investment Company of 1940. This Act effectively defines maximum percentages on the assets that make up 75% of the overall portfolio owned by the mutual fund or the unit investment trust. This 75% of assets include cash, cash equivalents, and securities. Out of this portion of the portfolio, the diversified investment company cannot have more than 5% of the assets associated with the securities of any one issuer. At the same time, the investment company ca
For all the things you know that are important you know that saving for retirement is something very important for your financial future – and that is why you probably have a retirement portfolio with a large variety of investment options, including holdings in a diversified investment company; if you don’t have a retirement portfolio, now may be a time to start looking into it. Diversified investment companies use the old adage, “never putting all your eggs in one baskets,” and incorporates those beliefs into their style of investments. A diversified investment company is a Unit Investment Trust (UIT) or mutual fund that is not allowed to have more than 5% of their assets in a single company or to have 10% of a company’s voting shares in correlation to 75% of its portfolio holdings. This has been determined by the Investment Company Act legislated instituted in 1940. The strategy of a diversified investment company is to invest in a large variety of securities and companies. Except fo
