The history of the development of collective investments market

The idea of collecting assets for collective investment is well known times ago all over the world.

The majority of researchers consider the United States of America to be the motherland of investment funds, associating its origin with founding of the first American Unit Fund - Massachusetts Investory Trust in 1924.

According to the second theory, the history of collective investments starts more earlier in XIX century in Northland by the order of King William the I-st about the collective investments fund in 1822.

Followers of the third point of view consider the author of collective investments conception to be Adriaan van Ketwich, Danish businessman who said that asset diversification increases investment appeal for physical persons with small initial fund.

In 1774 Adriaan van Ketwich has founded an investment fund - Eendragt Maakt Magt which means “consolidation makes return”.

This fund became a prototype of all European (and if future American) funds of collective investment.

The followers of third conception consider the first American fund to be Philadelphia Alexander Fund founded in 1907 who executed additional issue of securities twice a year facilitating entry of participants to the fund.

A year 1928 has become a turning-point in the history of unit funds formation when Vanguard Wellington Fund was founded. It was first fund of collective investment which invested 100% of assets to stocks and bonds (earlier funds preferred direct investments to business projects and trade).

In 30th of XX century legislative base on regulating of securities market activity and its new institutional participants – funds of collective investment.

Forming of legal base stimulated further popularization of investment funds industry.
In 1940 it was 68 investment funds and to the beginning of 50th it became 100. With the growth of stock market the sector of investment funds intensified its growth, in average 50 new participants for a decade.

After 60th aggressive growth funds began to develop and has formed assets for more than billion dollars for several years.

In 1971 the first index fund was founded, the concept of which John Bogle used in 1974. He founded an asset management company Vanguard (it became second investment company in the world by assets amount).

In 1976 the company has founded Vanguard 500 Index – the first index fund in the world for individual investors. By abolishing commission fees Vanguard made the buying of securities easier for physical persons.

In 1970 American market of investment funds consisted already of 361 participants and assists in management were more than for 47 billion dollars. In 14 years the quantity of investment funds has increased to 6 000, and assets amount under management achieved 2.1 trillion dollars.

To the beginning of 2005 there were more than 8 300 investment funds at USA stock market, and assets amount achieved 8.1 trillion dollars.

For March 2007 joint assets under management of American investment funds has achieved 10.8 dollars, that is 48% of world market (21.8 billion dollars at the beginning of 2007).

The structure of world market at the beginning of 2007.