What Is a Commingled Fund?

Investors discuss how to use commingled funds

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A commingled fund is a single fund or account that consists of assets combined from multiple accounts. These types of accounts are used to reduce the costs of managing multiple funds and offer centralized professional management of multiple investors' assets. A common example is a workplace retirement fund.

Key Takeaways

  • Commingled funds are single accounts that contain assets from multiple investors.
  • Commingled funds are often institutional accounts, such as a company's 401(k) plan.
  • Commingled funds are similar to mutual funds in that they both pool funds, lowering the investment management costs.
  • However, commingled funds are less transparent and less liquid than mutual funds.

Definition and Example of a Commingled Fund

Commingled funds are professionally managed funds, which pool assets from multiple investors. The funds have greater leverage to buy more securities than a single investor could afford on their own. As a result, commingled funds cost less to manage than multiple funds. In this way, they function like a mutual fund or exchange-traded fund (ETF). Still, there are significant differences in the regulation and liquidity of commingled funds.

  • Alternate name: Pooled funds
  • Alternate definition: In other uses, "commingling" can refer to the illegal use of funds for something other than their original intention.

For example, your employer offers a 401(k) plan. These types of retirement plans are a form of a commingled fund, since the investments are pooled as a result of the contributions from employees. Pension funds are another common type of commingled fund, as are insurance policies and other institutional accounts.

How Does a Commingled Fund Work?

Commingled funds are created when a group of investors decides they want to pool their assets. Generally, these investors must have a significant amount of funds at their collective disposal to make it worth the process of starting a commingled fund.

The first group of investors, such as a firm's upper management, create the commingled fund. Once the fund is open, investors can gain access. For instance, if you are a new worker at a company, you will get a description of the 401(k) plan offered and how you can invest in it.

It's important to review the commingled fund's investment objectives to ensure that they align with your financial goals and risk tolerance. Please check any issues of liquidity, meaning if trading volume is thin, it may be a warning sign, and you may not be able to sell the fund when you need cash. Commingled funds also may have restrictions on withdrawing money, such as you may have to wait until a specific date. As a result, commingled funds may not be the ideal way to meet short-term financial goals such as building an emergency fund.

Commingled Funds vs. Mutual Funds

Commingled Funds vs. Mutual Funds
Commingled Funds Mutual Funds
Combine investors' assets Combine investors' assets
Typically invest primarily in stocks and bonds Typically invest primarily in stocks and bonds
Controlled by a fund manager or management team Controlled by a fund manager or management team
Not widely available Widely available and easy to trade
Overseen by Office of the Comptroller of the Currency Overseen by Securities and Exchange Commission
Details of fund outlined in summary plan description Details of fund outlined in prospectus
Expenses tend to be lower than mutual funds Expenses tend to be higher than commingled funds

Commingled funds and mutual funds share some similarities, such as both funds bring all of an investor's assets into a centralized fund management system.

Commingled funds and mutual funds both consist of assets that come from multiple accounts, clients, or investors. Both types of funds typically invest in securities of the primary asset classes—stocks, bonds, and cash.

Like mutual funds, commingled funds can be managed by a single manager or a team. The management decides which securities to buy for the portfolio and develops the strategies for growth.


The fund's central asset design is simpler and less costly to manage.

Despite the similarities, commingled funds and mutual funds have distinct differences. One major difference is that mutual funds tend to be easy to invest in for individuals. You don't need to have a connection to those involved. Instead, just find a broker that sells the mutual fund, and place an order. On the other hand, commingled funds aren't as easy to trade in or out of versus mutual funds. You usually must have a connection to the party that controls the funds, such as working for an employer that offers a retirement plan of commingled funds.

The two types of funds are also governed by different agencies. Mutual funds must register with the Securities and Exchange Commission (SEC), while commingled funds do not. The Office of the Comptroller of the Currency and state regulators oversee commingled funds.


Commingled funds may offer their investors and prospective investors a summary plan description (SPD). Mutual funds must provide a prospectus.

Since commingled funds aren't overseen by the SEC, they require less legal structure. That tends to keep costs lower, especially when compared to actively managed mutual funds. 

Pros and Cons of Commingled Funds

  • Efficient

  • Low costs

  • Easy way to diversify

  • Lack of transparency

  • Lack of liquidity

Pros Explained

  • Efficient: Commingled funds are set up to be efficient. An advisor, money manager, or team of managers can use all their best ideas for one account rather than dozens or hundreds of individual accounts. This can be a win-win for the client and advisor.
  • Low costs: By pooling funds under a single management team, investors share the costs of managing and investing, which saves you money.
  • Easy way to diversify: Along with the lower costs, and similar to mutual funds, commingled funds often consist of a diversified blend of securities. This approach can lower the fund's market risk, compared to a portfolio that only invests in one asset class, such as large-cap stocks.

Cons Explained

  • Lack of transparency: Since they are not registered with the SEC, a commingled fund's performance isn't monitored through public channels. There are no ticker symbols, and updated financial data won't be posted on any major financial research sites. Investors must rely on the management firm to keep them in the loop. If managers don't communicate, an investor may have to work extra hard to find out how their investment is doing.
  • Lack of liquidity: Commingled funds aren't publicly traded and may not have significant cash on hand. As a result, there may be restrictions on how quickly clients can access cash, which reduces the liquidity of the assets. In other words, investors should keep other more liquid investments handy if cash might be needed in a hurry.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Securities and Exchange Commission. "Mutual Funds and ETFs | A Guide for Investors," Page 4.

  2. Office of the Comptroller of the Currency. "Collective Investment Funds."

  3. Securities and Exchange Commission. "Mutual Funds and ETFs | A Guide for Investors," Page 12.

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