Final answer:
The fund that distributes at least 90% of its Net Investment Income to shareholders and pays no taxes on the distribution amount is a Regulated Investment Company (RIC). Mutual funds and other investment vehicles can elect RIC status to avoid company-level taxation while offering easy investment options to individuals looking to diversify their portfolio.
Step-by-step explanation:
The fund that distributes at least 90% of its Net Investment Income to shareholders, pays no taxes on the distribution amount, and is subject to subchapter M is termed a Regulated Investment Company (RIC).
This designation is significant for taxation purposes and allows the fund to avoid being taxed at the company level if it meets certain requirements, including distributing most of its income to shareholders.
Mutual funds, exchange-traded funds (ETFs), and closed-end funds can all elect to be treated as RICs, provided they adhere to the appropriate regulations.
Purchasing a diversified group of stocks or bonds is facilitated by mutual funds, which allow financial investors to buy shares and receive a return based on the collective performance of the fund's assets.
Mutual funds remain a popular investment vehicle, with a growing percentage of U.S. households owning mutual fund shares for their retirement savings or pension plans.
This simplifies the investment process and allows investors exposure to a range of assets.