U.S. Mutual Fund Company Formation A Comprehensive Analysis of Setup Requirements and Licensing Regulations

How to Establish a Mutual Fund Company in the United States A Comprehensive Guide to Requirements and Licensing

In recent years, with the deep integration of global financial markets and the increasing demand for diversified investment tools, more and more institutions and individuals have begun to focus on overseas asset management. In particular, the United States - one of the world's largest capital markets - has become a key target for international capital expansion. According to a 2025 Bloomberg report, U.S. mutual funds and ETFs manage over $30 trillion in assets, accounting for nearly one-third of the global asset management market. This massive market size and mature regulatory system make the U.S. an ideal location to establish a public fund company.

However, successfully registering and operating a mutual fund company in the U.S. is no easy task. It requires not only strict legal compliance but also substantial capital, a professional team, and a robust risk control mechanism. This article will comprehensively analyze the key steps and core elements involved in setting up a public fund company in the United States, covering establishment procedures, licensing types, and regulatory requirements.

1. Determine the Fund Type and Structure

In the U.S., public funds typically refer to Mutual Funds or Exchange-Traded Funds ETFs, which raise capital from the public and are managed by professional fund managers. Other forms include closed-end funds and unit investment trusts.

Before establishment, it is essential to define the fund’s specific structure and legal form

Open-end funds Allow investors to buy and redeem shares at any time.

Closed-end funds Have a fixed number of shares after issuance, traded on exchanges.

ETFs Require special approval from the SEC and have experienced rapid growth in recent years.

The choice of fund structure will determine the type of license required and the regulatory path to follow.

2. Register as an Investment Adviser

To establish a public fund in the U.S., one typically needs to first set up an Investment Adviser Firm, responsible for investment decisions and portfolio management.

Under the Investment Advisers Act of 1940, all entities offering investment advisory services must register with either the Securities and Exchange Commission SEC or a state securities regulator. The threshold for SEC registration is managing over $150 million in assets; firms managing less may register at the state level.

The registration process includes

Submitting Form ADV

Disclosing company and executive information

Undergoing background checks

Establishing internal control and compliance systems

A dedicated compliance department is essential to ensure ongoing adherence to regulatory requirements.

3. Apply for Registered Investment Company RIC Status

If the goal is to launch a public fund product - such as a mutual fund or ETF - the fund itself must be registered with the SEC as a Registered Investment Company under the Investment Company Act of 1940.

The process includes

1. Forming the fund entity, typically as an open-end management investment company.

2. Drafting key documents, including the fund’s charter, trust agreement, management contract, and custodian agreement.

3. Preparing the prospectus and Form S-1, detailing investment strategies, risks, fee structures, and fund manager information.

4. Submitting to the SEC for review, which may take several months and involve revisions.

5. Public offering upon SEC approval, either through listing on an exchange or distribution to investors.

ETFs face a more complex approval process. Innovative ETF structures - such as actively managed or leveraged ETFs - may require additional documentation to demonstrate that they will not pose risks to market stability.

4. Obtain Industry Licenses and Certifications

Beyond the main regulatory framework, fund management firms and personnel must also obtain the following qualifications

FINRA membership Required if the firm engages in brokerage activities or distributes fund products.

Series 65/66 licenses Mandatory for investment adviser representatives.

Anti-Money Laundering AML compliance system Required under the Bank Secrecy Act.

Due diligence on third-party service providers, such as custodians, auditors, and legal advisors, to ensure they hold appropriate licenses.

5. Capital and Personnel Requirements

While the U.S. does not impose a minimum capital requirement, setting up a compliant public fund company typically requires at least several million dollars in startup capital to cover registration fees, legal services, marketing, office space, and staff salaries.

A professional team is essential, including

Portfolio Manager

Compliance Officer

Financial Auditor

Investment Adviser Representative

Legal Counsel

The Chief Compliance Officer CCO plays a critical role in overseeing internal compliance and reporting to the board, and is a key figure under SEC scrutiny.

6. Ongoing Compliance and Disclosure Obligations

Once the fund is operational, ongoing compliance becomes a central part of daily operations. The SEC requires regular submission of

Financial statements

Portfolio reports

Disclosures of material events

Transparency is crucial. Prospectuses must be updated regularly to ensure investor awareness. In recent years, the SEC has increased scrutiny on ESG funds, issuing warning letters in 2025 to several asset managers regarding the accuracy of ESG-related marketing claims. Fund companies should use such terminology carefully to avoid misleading investors.

Conclusion

Establishing a public fund company in the United States is a complex and multifaceted process involving intricate legal procedures, high compliance costs, and stringent talent requirements. Despite these challenges, the U.S. remains a top destination for global capital due to its mature and stable financial markets, strong investor base, and well-developed regulatory framework.

For institutions aiming to expand into the North American market, strategic planning, resource allocation, and proactive compliance measures are key to long-term success.