History Of The Mutual Fund
  1. Overview Of The Mutual Fund Industry
  2. History Of The Mutual Fund
  3. How A Mutual Fund Works
  4. Today's Mutual Fund Industry
  5. Fund Investment Qualities
  6. Fund Investment Quality Scorecard (FIQS)

History Of The Mutual Fund

By Richard Loth (Contact | Biography)

Historians are uncertain of the origins of investment funds. There are some indications that the idea of pooling assets for investment purposes began in the Netherlands in the late 18th or early 19th century. Closed-end investment funds did take root in Great Britain and France in the 1800s, making their way to the United States in the 1890s. (For more insight, see Uncovering Closed-End Funds.)

The creation of the Massachusetts Investors' Trust in Boston in 1924, which went public in 1928, is cited as the arrival of the modern mutual fund in the U.S. In 1929, there were 19 open-ended funds competing with nearly 700 of the closed-end variety. The market crash of 1929 wiped out the highly leveraged closed-end funds, but a small number of opened-ended funds managed to survive.

The creation of the Securities and Exchange Commission (SEC), the passage of the Securities Act of 1934 and the Investment Company Act of 1940 put the mutual fund business on a solid regulatory basis with safeguards for investors. In the early 1950s, the mutual fund count topped 100 and continued to grow through the next two decades. The bull markets of the 1980s and 1990s accelerated this growth, pushing the fund count over 3,000, with total assets surpassing the $1 trillion mark during this period.

In response to the mutual fund scandals of the 2003-2004 period, corrective regulatory and industry practices were, and continue to be, enacted. By the end of 2006, the mutual fund business was still growing and mutual funds in the U. S. numbered more than 8,000 with asset holdings of $10.4 trillion and new markets opening up around the world. (For related reading, see A Brief History Of The Mutual Fund.)

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How A Mutual Fund Works

  1. Overview Of The Mutual Fund Industry
  2. History Of The Mutual Fund
  3. How A Mutual Fund Works
  4. Today's Mutual Fund Industry
  5. Fund Investment Qualities
  6. Fund Investment Quality Scorecard (FIQS)
  1. Benchmark

    A standard against which the performance of a security, mutual ...
  2. Qualitative Analysis

    Securities analysis that uses subjective judgment based on nonquantifiable ...
  3. Alpha

    Alpha is used in finance to represent two things: 1. a measure ...
  4. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and ...
  5. Liquidity

    The degree to which an asset or security can be quickly bought ...
  6. Equity

    Equity is the value of an asset less the value of all liabilities ...
  1. How liquid are Vanguard mutual funds?

    The Vanguard mutual fund family is one of the largest and most well-recognized fund family in the financial industry. Its ... Read Full Answer >>
  2. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  3. Does OptionsHouse have mutual funds?

    OptionsHouse has access to some mutual funds, but it depends on the fund in which the investor is looking to buy shares. ... Read Full Answer >>
  4. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  5. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  6. When are mutual fund orders executed?

    Whether buying or selling shares of a fund, mutual fund trades are executed once per day after the market close at 4 p.m. ... Read Full Answer >>

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