An investment company is a collective or pooled investment structure that allows investors to combine their money to achieve a common investment objective. This can be in areas such as stocks and/or bonds, property, real estate, hedge funds, commodities and/or other financial instruments. Investment companies are regulated by the Securities and Exchange Commission (SEC) and provide returns either from profits made from investing the funds or from the fact that the investments appreciate in value.

The primary purpose of an investment company is to facilitate the purchase and sale of securities and to pool investor capital for diversification purposes. By investing pooled funds in an array of diversified securities across asset classes and over different geographical regions, investment companies are able to reduce systematic risk and offer shareholders greater stability. The main types of investment companies are closed-end funds, mutual funds, and exchange-traded funds (ETFs).

Closed-end funds are privately organized and typically sell a certain number of shares to the public in an initial offering, after which they are not traded on the stock exchange. As the shares are not freely traded, their prices fluctuate depending on investor demand. Mutual funds are the opposite of closed-end funds, they are managed by fund managers who try to outperform the wider market and their performance is closely watched by investors. Mutual funds are professionally managed pools of capital that can be bought and sold between investors on the open market.

Exchange-traded funds (ETFs) are similar to mutual funds as they offer a way to invest in a basket of securities. However, ETFs are listed on a stock exchange and trade throughout the day like stocks, providing investors with the potential to achieve greater returns as well as the ability to trade in and out of them quickly.

In summary, an investment company is a collective or pooled investment structure that enables investors to combine their assets for a common investment objective. Investment companies typically offer securities such as stocks, bonds, cash and other funds, with the goal to make profits from buying and selling these assets. They are regulated by the Securities and Exchange Commission and are managed by professional fund managers. The types of investment companies are closed-end funds, mutual funds and exchange-traded funds.