Retail Fund


The term retail fund refers to a mutual fund that caters to the needs of individual investors and is sold through brokers.  The characteristics of retail funds include low minimum investment thresholds and relatively high operating costs.


Mutual funds looking to attract investments from individuals will register with the Securities and Exchange Commission (SEC) as a retail fund. Since the objective of a retail fund is to attract individual investors, the minimum investment is typically relatively small, ranging from$250 to $1,000.  Because a retail fund will have a larger number of investors than an institutional fund, the fund's management team will need to conduct a larger number of security trades as shares of the fund are purchased and sold.  For this reason, a retail fund will typically charge higher fees than an institutional fund.  The most common example of a retail fund is a mutual fund.

Retail funds must also limit their investments to lower-risk securities such as stocks and bonds. These funds are prohibited by the SEC from taking positions that are considered too speculative, such as selling stocks short.

Related Terms

retail investor, institutional investor, institutional fund