“investment management company” means a licensed regulated legal entity in the securities market that manages the assets of an investment fund on the basis of a contract entered into with such investment fund. The Financial Regulatory Commission of Mongolia issues a special license for Asset Management companies, taking into account financial capacity, experience, professional personnel, their legal and ethical “appropriateness”.

There are 2 types of investment funds: mutual and private. In terms of type, there are open-end and closed-end mutual investment funds, and private investment funds have a company structure and contract structure.

The main feature of mutual investment is that it collects funds from the public, so the Financial Regulatory Commission closely monitors the operation and financial status of the investment instruments in order to protect the interests of small investors while keeping the risks to a minimum.

An open-end mutual fund regularly offers its units for sale to others and issues them in the amount of demand, and obliged to buy back the units, while a closed-end mutual investment fund issues securities by offering units to the public within the amount of capital set by the founder, and names the units. It is a fund that sells at the price and has no obligation to buy back the issued securities. In particular, investors of collective closed-end funds have the right to sell their unit rights to a third party through the Stock Exchange at a fixed price at that time, while investors in open-ended funds have the right to sell their units back to the fund at the current value of the fund’s assets.

A private fund can collect funds from a small number of so-called professional (as determined by the regulatory body) investors and invest the funds in all investment vehicles and over-the-counter LLCs in the Securities Market. In this sense, the level of risk and return is different from that of mutual funds, and the control of the regulatory body is relatively limited.