The history of mutual funds

The history of mutual funds

Although mutual funds have become quite popular lately, the modern American mutual fund traces its roots back to the 1920s. These early mutual funds focused on stocks, and in the late 1920s these funds used speculative tactics that added to the bubble which popped with the stock market crash in 1929.

However with the establishment of the Securities and Exchange Commission in the early 1930s, the stock market became a safer place for small investors. Small investors were especially aided in 1940 when the Investment Company Act was passed.

Mutual funds grew in popularity during the bull market of the 1950s and 1960s. But stock funds lost favor during the stagflation of the 1970s.

However money market mutual funds arose and enjoyed popularity in the late 1970s and early 1980s. As the bull market in stocks returned in the early 1980s, investors increasingly returned to stock mutual funds.