A Brief History Of Mutual Funds

Today the choice of possible investmentsignificantly after the great stock market crash of
opportunities is so varied that it can become1929. The Securities & Exchange Commission
overwhelming to a prospective investor. There(SEC) was born, and two key pieces of legislation,
are shares, bonds, commodities, securities,the Securities Act of 1933 and the Securities
property - to mention just a few.Exchange Act of 1934 were passed by Congress.
Mutual funds (also known as managed funds)The SEC helped create the Companies Act of
have become a popular choice among investors.1940 and now require companies to file their
This is because you are able to invest in manyfinancial information and provide disclosure to
different assets with just one investment vehicle.investors in the form of a prospectus. This means
This is done by pooling your funds with otherthat investors are now able to see which
investors to make one large investment.companies are healthy, and which companies they
In America the first modern mutual fund, theshould avoid.
Massachusetts Investors Trust, was started inIn the US the creation of the SEC did wonders
1924. Some people think that mutual fundsfor consumer confidence, and by the 1960's the
started in America but it may surprise them tomutual fund market was showing massive growth
know that the idea of a group of investorswith about 270 different mutual funds. The bear
pooling their money together goes back evenmarket of 1969 caused a cooling off period but
further.growth in the industry later resumed.
In fact, evidence of this type of investing can beThe history of mutual funds in Australia and New
traced back to Europe, dating back to the 1800s.Zealand is more recent. In this part of the world
King William 1 of the Netherlands was creditedthey are more commonly known as managed
with starting such a fund in 1822 and yet somefunds or unit trusts. Australia has had managed
even say that the King got the idea from a Dutchfunds since the second world war whereas New
merchant named Adriaan van Ketwich whoseZealand's Unit Trust Act of 1960 signified a
investment trust was created in 1774. Similarchange of heart by the Capital Issues Committee
pooled fund investment vehicles were started inwho until then were blocking attempts to
Switzerland in mid 1849, followed by Scotland inintroduce the concept of this style of investment.
the 1880s. Great Britain and France adopted thisWith new taxation rules positively affecting many
style of investing and the idea made its way tounit trusts in New Zealand this type of investment
the US in the 1890s.vehicle will only become more popular. The
The first group in the United States to invest inPortfolio Investment Entity (PIE) regime which
this way were the staff and faculty at Harvardstarted on 1 October 2007 will mean a more
University in 1893. It was their group investmenteffective taxation rate, particularly for those in
that went on to become the first mutual fund inthe highest tax bracket. It will even make it more
US history. The fund, which had started with 200tax effective than investing directly into any of
investors and $50,000 dollars, grew in value tothe asset classes. This is good news for investors
nearly $400,000 in only one year. As you can seein managed funds in New Zealand.
this first US mutual fund was unbelievablyMutual fund investing has had its ups and downs
successful.but still remains a great way to diversify,
Today there are approximately 10,000 differentparticularly for investors with smaller sums of
mutual funds available in the United States. Thismoney. It is all a matter of choosing your fund
represents approximately 83 million investors andwisely taking into account your time horizon, risk
makes mutual funds one of the most populartolerance and keeping your investment goals in
forms of investing in the US.mind. Mutual funds will around for many more
The rules of investing in mutual funds changedyears to come.