The History of Mutual Funds
The concept of pooling money together for investing purposes started in Europe in the mid-1800s. The first appearance of a similar fund in the United States was in 1893 when a fund was established for the faculty and staff of Harvard University. These early pooled-funds (trusts) resembled closed-end mutual funds. "The first official open-end mutual funds was born in the United States on March 21, 1924. On this day, a shoe salesman (Edward G. Leffler) and two stockbrokers (Hatherly Foster, Jr. and Charles H. Learoyd) pooled their money together in Boston, Massachusetts to form the Massachusetts Investors Trust." The Massachusetts Investors Trust grew from $50,000 to $392,000 in the first year. Growth for mutual funds was slow in the beginning, but funds gained popularity in the 1940s and 1950s. In February 2001, the mutual fund industry held $6.897 trillion in assets, according to the Investment Company Institute. Mutual funds continue to grow in popularity due to ease-of-use, liquidity, and unique diversification capabilities. 1 Mutual funds have been around much longer than most investors realize. The industry traces it's roots back to 19th century Europe. In 1868 the Foreign and C
5 Scudder, Stevens & Clark of Boston, established the first no-load fund in 1928. com/Personal/Investing/Mutual_Funds/P_Inv_Mutual_Funds_history. Services have grown as steadily as the funds themselves. At the end of the 1960s there were 269 funds with assets totaling approximately $48. The open-ended trust gave investors the option to sell back their shares in the trust at any time for the current market value of the underlying securities. It also mandated that shares be redeemed within seven days of a shareholder's request at a price based on the next calculated net asset value of the fund's portfolio. Virtually unlimited levels of diversification are available as well as, trading and execution services. cfm"The History of Mutual Funds", Mutual Funds Newsletter, available on the World Wide Web athttp://www. The Reserve Fund, the first money market mutual fund, was introduced in 1971. 12The next big change for the industry was in 1991 when Morningstar introduced its star ratings. com Consumer Reports at http://www. COM,available on the World Wide Web at http://www. Their findings are reporting to consumers to facilitate comparison.
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