How to Read the History of Mutual Funds

One could read the history of mutual funds as a history of the stock market taken to the people. The New York Stock Trust was the first official mutual fund in the United States begun in 1889, many decades after the concept first began in the Netherlands. By the time of the tumultuous end of the 1920s, the U.S. had 10 mutual funds. Today there are more than 6,000.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Computer with a high-speed connection to the Internet
• Time for research online and at the library
• Access to a large library or good bookstore

1. Understand the true definition of a mutual fund first. A mutual fund is a type of investment in which investors essentially pool their money in order to get more power and, consequently, a little less risk in the market. Mutual funds are professionally managed by financial managers who watch the market closely to move into and out of companies to bring about the best results.
2. Realize that the "best results" are not the same for every mutual fund on the market. Within stock-based mutual funds only, there are a variety of types, from those that seek aggressive growth to those looking for both growth as well as income in the form of regular dividends. There are also a variety of sector funds that invest in specific industries, such as technology, energy or communications.
3. Get online (see the Resources section below for a couple useful sites) or head to your library or bookstore once you have the basic concept of mutual funds under your belt. Between these two main sources you'll find all you need to know about the history of mutual funds.

Tips & Warnings

• Though many short mutual fund history lessons are available to read online, head to your local bookstore or library for full books on the subject.
• The longer history of mutual funds has some rather major ups and down, including an era during the 1960s when all but a few investors pulled out of funds that eventually grew by more than 9,000 percent. This does not happen anymore. Mutual funds are a relatively stable way to grow one's investment.
• Be aware that online some history pages on mutual funds may be under the banner of a particular company. If one company is featured prominently in the history, chances are that company is sponsoring the Web page.