Mutual funds come in two broad families. Proprietary mutual funds are those that are issued and managed by the company with which you have an account. Non-proprietary funds are issued and managed by some firm other than the one where you have an account. Both have benefits and drawbacks, and your ability to buy one or the other, or your cost to do so, can depend on the terms of your account.
Many companies that are in the investment brokerage business also have their own family of mutual funds. When you use an account at Company A to buy a fund from Company A that's only available when you invest with Company A, it's a proprietary fund. Many companies will aggressively sell you their own funds because they benefit when you buy them by being able to earn profit on the management fees.
A non-proprietary fund is simply a mutual fund issued by a company other than the one that holds your account. It's also available for anyone to buy. Non-proprietary funds are company agnostic and usually relatively liquid. If you change from one broker to another, you should even be able to take your shares with you.
Benefits of Proprietary Funds
Proprietary fund issuers tout their ability to achieve returns that are above the market, and some proprietary funds do generally outperform other funds that are available to the public. Theoretically, your broker should have a better understanding of his company's proprietary funds than of other funds, and so may be able to give you better counsel. In some cases, proprietary funds can be bought and sold without sales charges or commissions, since your broker wants to encourage you to buy his funds. In others, though, the fees are actually higher than for non-proprietary funds.
Benefits of Non-Proprietary Funds
In many cases, non-proprietary funds outperform proprietary funds. Many of them have lower sales charges and expense ratios, even though you may have to pay a sales commission to buy and sell them. Ultimately, the competitive nature of the non-proprietary market spurs many of these funds to better performance out of necessity -- if Fund C doesn't perform well, you can always buy Fund D.
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