Beginning the Foundation

Matthew P. Fink

in The Rise of Mutual Funds

Second edition

Published in print January 2011 | ISBN: 9780199753505
Published online January 2012 | e-ISBN: 9780199918805 | DOI:
Beginning the Foundation

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Many developments in recent years have contributed to mutual funds' success, including generally rising securities markets, a growing middle class, the creation of new types of funds and new ways to distribute fund shares, and laws designed to encourage Americans to save for retirement. However, the foundation of mutual funds' success was laid early, in the 1920s and 1930s. Beginning with the creation of the first fund in 1924, mutual funds used redeemable shares and a simple capital structure that did not result in leverage. In 1934, a federal agency, the U.S. Securities and Exchange Commission, was established that was devoted exclusively to administration of the federal securities laws. In 1936, a law was enacted providing favorable tax treatment for funds and their shareholders. This chapter traces the history of mutual funds, which began in Europe.

Keywords: mutual funds; mutual fund history; redeemable shares; Securities and Exchange Commission; federal securities laws

Chapter.  6855 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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