Investments, tenth edition

  Managed Investment Companies 

 There are two types of managed companies: closed-end and open-end. In both cases, the 

fund’s board of directors, which is elected by shareholders, hires a management company 

to manage the portfolio for an annual fee that typically ranges from .2% to 1.5% of assets. 

In many cases the management company is the firm that organized the fund. For example, 

Fidelity Management and Research Corporation sponsors many Fidelity mutual funds and 

is responsible for managing the portfolios. It assesses a management fee on each Fidelity 

fund. In other cases, a mutual fund will hire an outside portfolio manager. For example, 

Vanguard has hired Wellington Management as the investment adviser for its Wellington 

Fund. Most management companies have contracts to manage several funds.