How to compare Investment Companies

compare investment companiesBefore you compare investment companies, you should know that these are among the largest investors in the national financial market where they contribute major portions of U.S. issued stock shares, bonds, and securities. This means that investment companies have been playing a crucial role in short-term financing, as well as making sure that the securities are properly invested. When you compare investment companies, you must know what kind of service you are expecting in return. For this, you will need to know your financial goals, check the history of the investment company of your choice, and set the type of business relationship you want to establish with the investment firm.

Making the Smart Investment Choice

Remember that one of the motivating factors in making that smart investment is your financial goal. How much would you want to earn from the investment? There are many investment firms that promise you great returns to increase your wealth. Making an investment always come with a risk, as with any other type of business. You must learn how you can minimize loss and maximize profit. Also, keep in mind that the higher the promise of earnings will be, the greater the risk, and never enter into a business that you don’t fully know.

What are the Five Types of Investment Companies:

1. Management Investment Company – the most common type where companies manage various portfolios of securities. This can be classified into two types: Open-End and Closed-End. In an open-end investment firm, new shares may be bought and sold in forms of mutual funds. In a closed-end investment firm, shares are sold in one-time public sale.

2. Unit Investment Trusts or UIT – is an investment company where a trustee manages the investment portfolio and where a number of shares are predetermined for sale to shareholders.

3. Exchange Traded Funds or ETF – is an investment company which shares the function of either an open-end investment company or UIT. Returns are aimed to reach a certain market index.

4. Face Amount Certificates – is where an investment company issues debt certificates at fixed interest rates. Though this is a rare type, shareholders may convert their investment into cash before maturity date. Investors can pay in lump sum or installments.

5. Hedge Funds – is not subject to certain regulations that normally protect the investors of the mutual funds. These are mostly private investments that are unregistered.

What are the Factors You Must Consider When You Compare Investment Companies?

1. Performance of Mutual Funds

You must know that how an investment firm’s mutual fund performs in the stock market greatly reflects their quality as a company. Don’t fall into the trap of comparing performance based on absolute promises. You must check the type and size of assets, plus, the way assets are invested, before you choose to make an investment.

2. Full Disclosure Reports

Investigate the investment companies before you make a final choice. Remember that many who trade stocks over the counter are required by the SEC ( Securities and Exchange Commission ) to make full reports regularly. You can request for comprehensive reports by writing to the SEC. You may also want to pay more attention to financial news in your local area which gives you in-depth reports on the companies you are choosing from. You may also visit NASD Regulation online ( ) to see reports on thousands of securities firm and individual brokers.

3. Expenses and Returns

You must compare the ratio between your expenses and returns. Will you earn more in making that investment? It is a fact that inflation rate can affect the value of your future returns and consider this in making your projected future earnings. Keep in mind that the larger the funds are, the more difficult it is to make a diversified investment portfolio. This can mean difficulty in moving your stocks, mutual funds, or bonds for it to grow. Don’t forget to check the ratings of the investment company of your choice in many financial reports you can find online like Yahoo or MSN. Those with extensive portfolio and money funds are considered a more stable option.

Research Investment Companies

Time is needed in making a research to make an investment. To compare investment companies is the same when comparing businesses – you must choose the one which will give you the maximum benefits and services you need. In the long run, you must develop a win-win relationship with the investment firm of your choice. Be Proactive on Your Investment Decisions!


Investment Company Institute. “ 2009 Investment Company Fact Book. “ 2009. 49th Edition.

Economy Watch. “ Investment Company, Investment Firm, Investment Companies. “

Berger, Sandy. “ Investigate Before You Invest. “ 1998 – 2008.

Texas State Securities Board. “ How to Choose an Investment. “

Francois, Carol. “ How Do I Choose the Best Investment Companies. “

2003 – 2009. Wise

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  • http://yahoo vernon hart

    which retirement investment company take less fees, vangard, TIAA CREF , oppenheimer to name a few. where can i find a lists of all retirement investment company with the least and higher fees.

  • J.C. Wythe April 13, 2011 At 6:52 P.M.

    Where can I find a list of Retirement Investment compamies with the least and higher fees, in paticular, comparing ,
    Edward D. Jones to Fidelity Investments.