![]() The Securities Exchange Act of 1934 requires that issuers of securities, including mutual funds, report regularly to their investors.The Securities Act of 1933 requires that all investments sold to the public, including mutual funds, be registered with the SEC and that they provide prospective investors with a prospectus that discloses essential facts about the investment.In 1929, open-end funds accounted for only 5% of the industry's $27 billion in total assets.Īfter the Wall Street Crash of 1929, the United States Congress passed a series of acts regulating the securities markets in general and mutual funds in particular. In the United States, closed-end funds remained more popular than open-end funds throughout the 1920s. The first open-end mutual fund with redeemable shares was established on March 21, 1924, as the Massachusetts Investors Trust, which is still in existence today and managed by MFS Investment Management. funds were generally closed-end funds with a fixed number of shares that often traded at prices above the portfolio net asset value. Mutual funds were introduced to the United States in the 1890s. His aim was to provide small investors with an opportunity to diversify. In response to the financial crisis of 1772–1773, Amsterdam-based businessman Abraham (or Adriaan) van Ketwich formed a trust named Eendragt Maakt Magt ("unity creates strength"). ![]() The first modern investment funds, the precursor of mutual funds, were established in the Dutch Republic. These funds may be sold throughout the European Union and in other countries that have adopted mutual recognition regimes. Luxembourg and Ireland are the primary jurisdictions for the registration of UCITS funds. Mutual funds accounted for approximately 50% of the assets in individual retirement accounts, 401(k)s and other similar retirement plans. The countries with the largest mutual fund industries are:Īt the end of 2019, 23% of household financial assets were invested in mutual funds. Market size Īt the end of 2020, open-end mutual fund assets worldwide were $63.1 trillion. Hedge funds and exchange-traded funds are not mutual funds, and each is targeted at different investors, with hedge funds being available only to high net worth individuals. A single mutual fund may have several share classes by which larger investors pay lower fees. ![]() Mutual funds are regulated by governmental bodies and are required to publish information including performance, comparison of performance to benchmarks, fees charged, and securities held. However, these come with mutual fund fees and expenses. The advantages of mutual funds include economies of scale, diversification, liquidity, and professional management. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. They can be traded directly with the issuer. Open-end funds are purchased from or sold to the issuer at the net asset value of each share as of the close of the trading day in which the order was placed, as long as the order was placed within a specified period before the close of trading. Primary structures of mutual funds are open-end funds, closed-end funds, unit investment trusts. Funds may also be categorized as index funds, which are passively managed funds that track the performance of an index, such as a stock market index or bond market index, or actively managed funds, which seek to outperform stock market indices but generally charge higher fees. Mutual funds are often classified by their principal investments: money market funds, bond or fixed income funds, stock or equity funds, or hybrid funds. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in Europe ('investment company with variable capital') and open-ended investment company (OEIC) in the UK. A mutual fund is an investment fund that pools money from many investors to purchase securities.
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