Commingled Funds Explained 2025: Costs, Benefits, and How They Operate

Adam Hayes, Ph.D., CFA, brings over 15 years of Wall Street experience as a derivatives trader and is a specialist in economics and behavioral finance. Holding a master's from The New School for Social Research and a Ph.D. in sociology from the University of Wisconsin-Madison, Adam is also a CFA charterholder and licensed by FINRA. He currently teaches economic sociology at Hebrew University in Jerusalem.

What Is a Commingled Fund?

A commingled fund pools assets from multiple investor accounts into a single portfolio. This consolidation helps reduce management costs and improves operational efficiencies.

These funds, often called institutional funds, are not publicly traded or available to retail investors. Instead, they serve pension plans, retirement schemes, insurance companies, and other institutional clients.

Key Highlights

• Investment managers combine capital from various investors into one fund.
• They are managed by professional portfolio managers investing across stocks, bonds, or mixed assets.
• Unlike mutual funds, commingled funds are not regulated by the SEC.
• They are non-public and cannot be directly purchased by individual investors.
• Commonly utilized in institutional accounts like pension and retirement plans.

How Do Commingled Funds Work?

Commingling involves merging assets from different investors into a unified investment vehicle, a practice fundamental to many types of investment funds.

Similar to mutual funds, commingled funds are professionally managed and invest across various securities, benefiting from diversification and economies of scale that help lower costs and reduce risk.

However, commingled funds typically have lower administrative expenses and no marketing fees because they are not publicly offered and face different regulatory requirements.

Regulatory Oversight

Commingled funds do not fall under SEC regulation, which means fewer disclosure mandates compared to mutual funds that must comply with the Investment Company Act of 1940.

They are, however, overseen by the Office of the Comptroller of the Currency and state regulators to ensure compliance and fiduciary responsibility.

Instead of a prospectus, these funds provide a Summary Plan Description (SPD), detailing investment objectives, strategies, manager backgrounds, and participant rights—critical reading for plan members.

Note

Performance updates for commingled funds are typically available through your employer’s retirement plan administrator rather than public channels.

Advantages and Drawbacks

Advantages

Lower regulatory burdens often translate into reduced legal and operating expenses, which can enhance net returns compared to similarly performing mutual funds.

Disadvantages

Since commingled funds lack ticker symbols and public trading, tracking dividends, capital gains, and income can be challenging. Transparency is limited compared to mutual funds.

• Professional management
• Diversification benefits
• Lower fees than mutual funds
• Cost efficiencies through scale

• Illiquidity
• Limited transparency
• No SEC oversight
• Restricted investor access

Example: Fidelity Contrafund Commingled Pool

This fund is offered to qualified employee benefit plans and managed by portfolio experts focusing on large-cap growth stocks in sectors like technology, healthcare, and finance.

With a 0.43% expense ratio and an annualized return of 14.69% since 2014, it outperforms the S&P 500’s 12.96%, although it's not available to the general public.

Important Legal Considerations

Illegal Commingling

Improper mixing of client funds with personal or firm assets breaches fiduciary duties and contracts. Investment managers must manage assets separately as agreed in management agreements.

Special care is needed in legal cases or real estate transactions where funds must be handled distinctly.

Types of Commingled Funds

These include equity funds, fixed income funds, and alternative investments like hedge funds, derivatives, and private equity.

Who Can Invest?

Typically, only institutional investors or accredited high-net-worth individuals can access commingled funds. They are generally inaccessible to everyday retail investors.

Where to Find Information?

Information is usually provided through employer-sponsored retirement plans. Public disclosures are rare due to the private nature of these funds, though some companies publish periodic performance reports.

Conclusion

Commingled funds pool institutional investors’ assets into professionally managed portfolios with fewer regulatory requirements than mutual funds. While offering cost advantages and diversification, they are less transparent and primarily available through workplace retirement plans rather than the open market.

Understanding the features, benefits, and limitations of commingled funds can help institutional investors optimize their portfolios in today’s financial landscape.

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