Contractual funds are established by fund contracts signed between fund investors, fund managers and fund custodians. The rights of fund investors are mainly embodied in the terms of fund contracts, and the main aspects of fund contract terms are usually regulated by fund law.

Compared with contractual funds, corporate funds have the advantages of clear legal relationship and perfect supervision and restraint mechanism, but contractual funds are easier to set up. Because the difference between the two is mainly manifested in the difference of organizational structure and legal relationship, there is actually no difference between good and bad. Therefore, in order to make the securities investment fund system more flexible, many countries allow corporate funds and contractual funds to coexist. Corporate funds are the most common in the United States, while contract funds are more common in Britain.