Unlike a managed account, which is not an “excepted investment fund,” a publicly traded mutual fund qualifies as an “excepted investment fund” because: a. The publicly traded mutual fund is an investment fund in which various investors have “pooled” their money. b. The publicly traded mutual fund is independently managed. As an investor in such a fund, you have no ability to direct the fund manager to buy or sell any investments. c. The publicly traded mutual fund, which is actually an investment company, is publicly traded or available. d. The publicly traded mutual fund is widely held. As a “pooled investment” a publicly traded mutual fund issues shares of an investment company that typically has thousands, and in some cases millions, of investors. By contrast, a managed account is not a pooled investment fund because: a. The managed account is not an investment fund in which various investors have “pooled” their money. As an investor in a managed account, you have not “pooled” your money with other investors. Instead, you hold a separate account of your own. Although the account manager may have offered you the option of selecting a predetermined “portfolio” of assets, you own each of these assets individually and directly in your own name. b. The managed account is not independently managed. As an investor in a managed account, you likely have the ability to direct the account manager to make some adjustments to your personal account in order to customize your portfolio of holdings. Even in the rare case in which an account manager will not honor some limited requests to sell or refrain from purchasing certain securities, you may be able to remove the portfolio of securities from the account and manage the securities yourself. c. The managed account is not publicly traded or available. As stated above, a mutual fund sells its own shares. But the manager of your account does not sell shares of your account. It may be true that the manager offers to purchase for investors securities from an established list that it describes as a “portfolio” in its marketing literature, but the “portfolio” is not a company or other legal entity. The “portfolio” is merely a list of securities that the account manager is willing to purchase for individual account holders. d. The managed account is not widely held. You are the only investor in your account. While other investors may have selected the same securities for their own accounts, they maintain their accounts separately from yours. Thus, while a mutual fund may have millions of investors, your account has only one investor. For these reasons, a managed account does not satisfy the required criteria for qualifying as an “excepted investment fund” that are established in 5 C.F.R. § 2634.310(c).
This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.
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