Quick Answer
Every pooled-investment question boils down to matching a fact pattern to a structure: how shares are bought and sold, whether the portfolio is actively managed, who oversees it, and who is allowed to invest. This synthesis collects the identifying cues, the key numbers, and the comparison tables you need to make that call fast.
Use the tables below as a drill, not a first read. If a row surprises you, go back to that vehicle's own lesson before the exam.
How Do You Quickly Identify Which Vehicle a Question Describes?
| If the question mentions... | You're dealing with... |
|---|---|
| Continuous offering, redeemable at net asset value (NAV), 7-calendar-day redemption | Open-end fund (mutual fund) |
| Fixed shares, trades on exchange, premium/discount to NAV | Closed-end fund |
| Fixed portfolio, no management, trustees, termination date | Unit Investment Trust (UIT) |
| Intraday trading, index tracking, in-kind creation/redemption | ETF |
| 75/75/90, real estate, pass-through income | REIT |
| Investment Company Act (ICA) exemption, qualified purchasers, limited partnership | Private fund |
| 2 and 20, lock-up, leverage, long/short | Hedge fund |
What Numbers Do You Need to Know Cold?
| Number | What It Means |
|---|---|
| 7 calendar days | Maximum for mutual fund redemption (calendar days, not business days) |
| 75%/75%/90% | REIT rules (assets/income/distribution) |
| 95% | REIT gross income from passive sources |
| 100 | Maximum investors for the small-investor exemption |
| $1 million | Accredited investor net worth threshold |
| $200K/$300K | Accredited investor income (individual/joint) |
| $5 million | Individual qualified purchaser (investments) |
| $25 million | Entity qualified purchaser (investments) |
| 100 | Minimum REIT shareholders |
| 5/50 rule | No more than 50% of REIT shares held by 5 or fewer individuals |
How Do the Registered Investment Company Types Compare?
| Feature | Conventional Mutual Fund (Open-End) | Closed-End | UIT | ETF (also legally Open-End) |
|---|---|---|---|---|
| Shares outstanding | Variable (unlimited) | Fixed | Fixed | Variable |
| Pricing | NAV (end of day, forward pricing) | Market price (continuous) | NAV | Market price (intraday) |
| Trading | Redeem with fund | Exchange | Redeem with trust | Exchange |
| Premium/Discount | Always at NAV | Can trade at premium/discount | At NAV | Usually near NAV |
| Management | Active | Active | None (fixed) | Usually passive |
| Leverage | Not permitted | Permitted | N/A | N/A |
| Can short/margin | No | Yes | No | Yes |
Why is this important? If a question describes a conventional mutual fund trading at a discount to NAV, that fund must actually be closed-end, since a conventional open-end fund redeems at NAV and cannot trade below it. An ETF is technically also a type of open-end fund under the Investment Company Act, but it trades on an exchange and can show a small premium or discount too, so watch which specific structure the question names.
How Do the Private Fund Types Compare?
| Feature | Hedge Fund | Private Equity | Venture Capital |
|---|---|---|---|
| Invests in | Public market securities | Established private/public companies | Early-stage startups |
| Strategies | Long/short, leverage, derivatives | Buyouts, growth equity | Funding growth |
| Fund life | Ongoing (with lock-ups) | 7-10+ years | 10+ years |
| Liquidity | Limited (lock-up) | Very illiquid | Very illiquid |
| Capital | Invested at once | Called over time | Called over time |
| ICA exemption | Small-investor or qualified-purchaser exemption | Small-investor or qualified-purchaser exemption | Small-investor or qualified-purchaser exemption |
What Questions Should You Ask on Every Pooled Investment Question?
When you see a pooled investment question, ask:
- Is it registered or exempt? (Registered = mutual fund, closed-end, UIT, ETF; Exempt = hedge fund, private equity (PE), venture capital (VC))
- How are shares acquired? (From fund = open-end; On exchange = closed-end, ETF)
- Is it redeemable? (Yes = open-end, UIT; No = closed-end)
- Is it managed? (Yes = open-end, closed-end, hedge fund; No = UIT, most ETFs)
- Who can invest? (Anyone = registered funds; Accredited/Qualified = private funds)
Think of it this way: The exam tests whether you can match the pooled investment type to its defining characteristics. Focus on what makes each type unique: UITs have no management, ETFs trade intraday, REITs follow 75/75/90, hedge funds use 2 and 20.
What Should You Check on Exam Day?
- Can you run through the five-question framework above on a cold fact pattern and land on the right vehicle?
- Do you know the key numbers table well enough to answer a "what percentage/dollar amount" question without hesitating?
- Can you tell the difference between an ETF's small, arbitrage-driven premium/discount and a closed-end fund's larger, persistent one?
- Do you know that REITs sit outside the Investment Company Act entirely and follow IRC qualification rules instead?