Friday, 27 November, 2020

A Peek Into the Mutual Fund History Book


Before you start working on developing your portfolio, it is important to have some kind of understanding about mutual fund history. This will help you understand not only why you want to invest in a particular fund, but also why mutual funds are preferable to stocks, fixed deposits and other investments. With mutual fund history, there are two areas you need to consider. The first refers to the history of these funds at large and how they developed as a much sought after investment opportunity. The other is the history of the particular fund in which you are looking to invest. Both these areas are very important not only independently but also in terms of how they correlate to each other.

Mutual Fund History Over The Years

While there is still some debate going on as to when the first mutual fund was actually launched, experts can safely say that it was in the first half of the 19th century in Europe. It started out as a way of giving small investors a chance to diversify their investments and thus be exposed to a lower risk. In the 1890’s this idea travelled to the United States, where it then became very popular in the early 20th century. In 1924 the Massachusetts Investors Trust introduced what was called the Modern Mutual Fund, which was the first modern fund. From then onwards, especially after each of the world wars, these funds have experienced tremendous growth, with investors turning to them especially in times of economic strife and shortfalls.

With the recent recession, many investors have lost a large percentage of their investments. Due to this there is a marked air of caution that has permeated the financial markets at the moment. But, with the unease settling down gradually, investors have now started looking at mutual funds again as a safer and more reliable option.

Individual Mutual Fund History

When deciding on what funds to add to their portfolio, investors often look to the history of that particular fund from the time of its origin to the present. This is to help them determine how exactly the fund has developed and how much growth is expected in the future. Many financial companies spend a lot of money and time on gathering and presenting this information to their investors. They know that this is crucial to helping customers make a decision, and therefore this information is highlighted regularly through the website, newsletters and other publications. At the end of every year, a detailed analysis is conducted on how the fund performed during the year, and this again is circulated among the investors.

By combining the historical data of a particular fund with that of mutual funds in general, one can develop a well-balanced and realistic perspective on both. That is why it is important to consider mutual fund history at both the micro and the macro levels before you make any decision about your investments.

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