Editing Mutual fund (section)

=== Early history ===
The first modern [[investment fund]]s, the precursor of mutual funds, were established in the [[Dutch Republic]]. In response to the [[Crisis of 1772|financial crisis of 1772–1773]], Amsterdam-based businessman Abraham (or Adriaan) van Ketwich formed a trust named Eendragt Maakt Magt ("unity creates strength"). His aim was to provide small investors with an opportunity to diversify.<ref>Goetzmann, William N.; Rouwenhorst, K. Geert (2005). ''The Origins of Value: The Financial Innovations that Created Modern Capital Markets''. (Oxford University Press, {{ISBN|978-0195175714}}))</ref><ref name=geert>{{Cite journal | first=K. Geert | last=Rouwenhorst | url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=636146 | title=The Origins of Mutual Funds | journal=[[Yale School of Management]] | publisher=[[Social Science Research Network]] | date=December 12, 2004 | ssrn=636146 | access-date=March 26, 2017 | archive-date=March 27, 2017 | archive-url=https://web.archive.org/web/20170327165556/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=636146 | url-status=live }}</ref>

The first [[investment trust]] in the UK, the [[Scottish American Investment Trust]] formed in 1873, is considered the "most obvious progenitor" to the mutual fund, according to [[Diana B. Henriques]].<ref>{{harvnb|Henriques|1995|p=51}}</ref>

One of the earliest investment companies in the U.S. similar to a modern mutual fund was the Boston Personal Property Trust that was founded in 1893; however, its original intent was as a workaround to Massachusetts law restricting corporate real estate holdings rather than investing.<ref>{{harvnb|Farina|Freeman|Webster|1969|p=770}}</ref> Early U.S. funds were generally closed-end funds with a fixed number of shares that often traded at prices above the portfolio [[net asset value]].<ref>{{harvnb|Farina|Freeman|Webster|1969|p=744}}</ref> The first open-end mutual fund with redeemable shares was established on March 21, 1924, as the Massachusetts Investors Trust, which is still in existence today and managed by [[MFS Investment Management]].<ref>{{harvnb|Farina|Freeman|Webster|1969|p=772}}</ref><ref>{{harvnb|Henriques|1995|pp=53-54}}</ref>

In the U.S., there were nearly six times as many closed-end funds as mutual funds in 1929.<ref>{{harvnb|Farina|Freeman|Webster|1969|p=748}}</ref>

After the [[Wall Street Crash of 1929]], the [[United States Congress]] passed a series of acts regulating the securities markets in general and mutual funds in particular. 
* The [[Securities Act of 1933]] requires that all investments sold to the public, including mutual funds, be registered with the SEC and that they provide prospective investors with a [[Prospectus (finance)|prospectus]] that discloses essential facts about the investment. 
* The [[Securities Exchange Act of 1934]] requires that issuers of securities, including mutual funds, report regularly to their investors. This act also created the Securities and Exchange Commission, which is the principal regulator of mutual funds. 
* The [[Revenue Act of 1936]] established guidelines for the taxation of mutual funds. It allowed mutual funds to be treated as a [[flow-through entity|flow-through or pass-through entity]], where income is passed through to investors who are responsible for the tax on that income.
* The [[Investment Company Act of 1940]] established rules specifically governing mutual funds. 
These new regulations encouraged the development of open-end mutual funds (as opposed to closed-end funds).<ref>{{Cite book | last=Fink | first=Matthew P. | url=https://books.google.com/books?id=VtpQovTBAfIC | title=The Rise of Mutual Funds: An Insider's View | publisher=[[Oxford University Press]] | isbn=978-0-19-975350-5 | date=January 13, 2011 | access-date=February 29, 2020 | archive-date=November 3, 2023 | archive-url=https://web.archive.org/web/20231103103548/https://books.google.com/books?id=VtpQovTBAfIC | url-status=live }}</ref>

In 1936, U.S. mutual fund industry was nearly half as large as closed-end investment trusts. But mutual funds had grown to twice as large as closed-end funds by 1947; growth would accelerate to ten times as much by 1959. In terms of dollar amounts, mutual funds in the U.S. totaled $2 billion in value in 1950 and about $17 billion in 1960.<ref>{{harvnb|Henriques|1995|p=142}}</ref> The introduction of [[money market]] funds in the high-interest rate environment of the late 1970s boosted industry growth dramatically. 

The first retail [[index fund]]s appeared in the early 1970s, aiming to capture average market returns rather than doing detailed company-by-company analysis as earlier funds had done. [[Rex Sinquefield]] offered the first [[S&P 500]] index fund to the general public starting in 1973, while employed at American National Bank of Chicago.<ref name=Wigglesworth-2021/><ref name="bweek-crusade">[https://web.archive.org/web/20120330222645/http://www.businessweek.com/articles/2012-03-29/rex-sinquefields-crusade-against-income-taxes Rex Sinquefield's Crusade Against Income Taxes.] Business Week. March 12, 2012.</ref> Sinquefield's fund had $12 billion in assets after its first seven years.<ref name="wsj-interview">{{cite web|url=https://www.wsj.com/articles/SB10001424052970203897404578078551936968168|title=The Weekend Interview with Rex Sinquefield: Meet One of the Super-PAC Men|last=Riley|first=Naomi Schaefer|date=October 26, 2012|work=WSJ|accessdate=December 30, 2015|url-access=subscription|archive-date=December 8, 2015|archive-url=https://web.archive.org/web/20151208082609/http://www.wsj.com/articles/SB10001424052970203897404578078551936968168|url-status=live}}</ref> John "Mac" McQuown also began an index fund in 1973, though it was part of a large pension fund managed by [[Wells Fargo]] and not open to the general public.<ref name=Wigglesworth-2021>Robin Wigglesworth (2021). Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever. Portfolio Books, ISBN  0593087682</ref> Batterymarch Financial, a small [[Boston]] firm then employing [[Jeremy Grantham]], also offered index funds beginning in 1973 but it was such a revolutionary concept they did not have paying customers for over a year.<ref name=Wigglesworth-2021/> [[John Bogle]] was another early pioneer of index funds with the First Index Investment Trust, formed in 1976 by [[The Vanguard Group]]; it is now called the "Vanguard 500 Index Fund" and is one of the largest mutual funds.<ref name=Wigglesworth-2021/>

Beginning the 1980s, the mutual fund industry began a period of growth.<ref name=icfactbook>{{Cite book | url=https://www.ici.org/system/files/2021-05/2021_factbook.pdf | title=2021 Investment Company Fact Book | publisher=[[Investment Company Institute]] | year=2021 | access-date=2021-10-03 | archive-date=2021-09-27 | archive-url=https://web.archive.org/web/20210927071810/https://www.ici.org/system/files/2021-05/2021_factbook.pdf | url-status=live }}</ref> According to [[Robert Pozen]] and Theresa Hamacher, growth was the result of three factors:
# A [[bull market]] for both stocks and bonds, 
# New product introductions (including funds based on [[municipal bond]]s, various industry sectors, international funds, and [[target date fund]]s) and 
# Wider distribution of fund shares. Among the new distribution channels were retirement plans. Mutual funds are now the a preferred investment option in certain types of retirement plans, specifically in [[401(k)]], other [[defined contribution plan]]s and in [[individual retirement account]]s (IRAs), all of which surged in popularity in the 1980s.<ref name=Managed>{{Cite book | title=The Fund Industry: How Your Money is Managed | last1=Pozen | first1=Robert | last2=Hamacher | first2=Theresa | publisher=[[Wiley (publisher)|Wiley]] | year=2015 | isbn=9781118929940 | location=[[Hoboken, New Jersey]] |pages=8–14}}</ref>

The [[2003 mutual fund scandal]] involved unequal treatment of fund shareholders whereby some fund management companies allowed favored investors to engage in prohibited [[late trading]] or [[market timing]]. The scandal was uncovered by former [[New York Attorney General]] [[Eliot Spitzer]] and led to an increase in regulation.

In a 2007 study about German mutual funds, Johannes Gomolka and Ralf Jasny found statistical evidence of illegal [[time zone]] arbitrage in trading of German mutual funds.<ref>{{cite web | url=https://beckassets.blob.core.windows.net/product/toc/122544/9783898218337_toc_001.pdf | last1=Gomolka | first1=Johannes | first2=Ralf | last2=Jasny | title=Die zwei Gesichter der deutschen Fondsbranche. Cut-Off-Zeit und Zeitzonenarbitrage | trans-title=The two faces of the German fund industry. Cut-off time and time zone arbitrage | publisher=[[Ibidem Press]] | location=[[Hannover]] | date=January 10, 2007 | language=de | access-date=October 3, 2021 | archive-date=October 3, 2021 | archive-url=https://web.archive.org/web/20211003014224/https://beckassets.blob.core.windows.net/product/toc/122544/9783898218337_toc_001.pdf | url-status=live }}</ref> Though reported to regulators, [[BaFin]] never commented on these results.