What is a Retail Fund?

A retail fund is an investment fund with offerings which are tailored to individuals, rather than to institutional buyers. The selections at a retail fund are also developed with novice investors in mind, and such funds are more tightly regulated than some other types of funds, such as hedge funds. Many mutual funds operate as retail funds, and other types of investment funds may also be organized in this way.

People can purchase shares in a retail fund through investment dealers and via open market transactions. This is in contrast with other types of funds, which are provided through wholesalers. Typically, a lower minimum investment is required to join a retail fund, and the management fees and other associated costs are also lower. The returns vary, depending on how well the fund is managed and the current market conditions; information about average returns from such funds is often available through publications which profile investment opportunities and track market activities.

This type of fund is registered with a regulatory agency such as the Securities and Exchange Commission (SEC) in the United States. Registering subjects the fund to restrictions and regulations which are designed to protect investors. Regulators can act in a position of oversight over the fund, reviewing mandatory filings provided by the fund to confirm that the fund is complying with the law. If a retail fund violates regulations, it can be fined and its activities may be suspended, depending on the nature of the violation.

Regulation through government agencies includes informing funds of their rights and responsibilities, overseeing financial activities, and enforcing aspects of the law which pertain to investment funds. Regulatory agencies use investigations, filings and reports submitted to them, and many other tools to accomplish their work, which is focused on keeping investors and the market safe. Ideally, such agencies prefer to prevent problems than to react to them after the fact. Less heavily regulated investment funds come with much higher investment risks and are designed for more experienced investors and institutions.

For investors who are not very familiar with the market, a retail fund provides an opportunity to invest in a more sheltered environment. Financial advisors can offer suggestions for specific funds in which people may be interested, such as funds which focus on purchasing shares in environmentally responsible companies for investors who want to invest as ethically as possible. A financial advisor can also provide assistance with other aspects of investing and retirement planning.