Registered funds represent a large and growing asset class in the United States. These retail funds are subject to registration under the Investment Company Act of 1940 and their activities are regulated by the Securities and Exchange Commission (SEC). Examples of registered funds include mutual funds, exchange traded funds (ETFs), and listed closed-ended funds.

A closed-ended fund is a type of fund that raises money through an underwritten public offering. They only issue a set number of shares to certain investors. The shares of closed-ended funds are not redeemable. The shares of closed-ended funds can be purchased or sold on stock exchanges in secondary market transactions. Many closed-ended funds pay distributions on a quarterly or other regular basis.

Another type of fund is an open-ended fund. Open-ended funds are pooled investment vehicles that can issue an unlimited number of shares to the public. Open-ended funds continuously accept new investors and offer investors continuous liquidity. Most mutual funds and ETFs are considered open-ended funds. Unlike closed-ended funds, the shares of open-ended funds are redeemable at the shareholders’ option. The shares can be redeemed at their net asset value (NAV).

Both closed-ended and open-ended funds are subject to the regulations of the Investment Company Act of 1940. Funds registered under the Investment Company Act are subject to limitations on investments. For 75% of the fund’s assets, the fund is not allowed to invest more than 5% of those assets in a single company. The remaining 25% of the fund’s assets are not subject to this investment restriction. Government securities are exempt from these restrictions.

The investment advisers that manage the investment portfolios of registered funds are subject to the regulations of the Investment Advisers Act of 1940. The investment advisers generally must be registered with the SEC. They also have a duty to act in the best interests of the fund.

Since registered funds are regulated by the SEC, they have to file periodic reports. They must file an annual report containing the fund’s financial statements on a Form N-CSR. A separate annual report must be filed on a Form N-PX in order to disclose the fund’s proxy voting data. Both closed-ended and open-ended funds must also file quarterly reports on Form N-Q with information on the fund’s portfolio holdings.

The process for registering a closed-ended fund involves filing a Form N-2 registration statement with the SEC. This form requires disclosure of the fund’s investment objectives, fee structure, and risk factors. The Form N-2 undergoes an SEC review process, which may involve receiving comments on the registration statement. An amended Form N-2 will have to be filed to address the SEC’s comments. A closed-end fund generally issues most of its shares in an initial public offering to certain investors. After the initial public offering, shares of the fund can be purchased and sold on exchanges.

The process for registering an open-ended fund involves filing a Form N-1A registration statement with the SEC. A Form N-1A requires similar information to a Form N-2 for a closed-ended fund. A Form N-1A is also reviewed by the SEC and amendments may have to be filed to address SEC comments.