Mutual Fund Trust Vs Corporation
Mutual fund trust vs corporation is important to understand to determine tax responsibility and legal rights of the different fund types.3 min read
Similarities Between a Mutual Fund Trust and a Corporation
A mutual fund trust and corporation are actually very similar. Both are considered to be an investment portfolio and are often managed by more than one investor. Some mutual fund companies are even offering the same deal as both a mutual fund trust and a corporation. On paper, they look very similar. However, it is also important to consider the differences.
These are some of the biggest differences between mutual fund trusts and corporations:
- Corporations are structured as a typical corporation whereas a mutual fund trust is designed as a trust.
- Corporate funds can have more than one tax entity. Mutual trust funds, however, usually only have one fund.
- Corporations can take advantage of tax-free switching and rebalancing of funds for compounding power. Mutual funds do not have this same option.
- Corporations allow for profits and losses to be distributed across all funds. Mutual funds do not.
- Corporations usually have a higher price tag than mutual funds.