By: Sun Zhao Yang
Compiler: http://www.fundcn.org

Dream of the New World — Fund in the United States (4)

United States stock market in the 1920s of the 19th century sustained prosperity of the eight years later, as the law is not perfect, it With the end of the 1920s the world capitalist economic crisis and the outbreak of the October 1929 global stock market collapse, empty market for more than four years, from late 1929 to late 1930, the Road. Jones industrial average index fell 34%. Closed-end fund net assets fell by 72%. Results of closed-end funds have become investors in the Poisons — Throughout the 1930s for not introducing a new closed-end funds.

The collapse of the stock market is also reduced the open-end fund market, but it also demonstrated its superiority. Can be redeemed at any time, not over-borrowing, pay to maintain good portfolio investment flows, etc., for these reasons, open-end funds than closed-end funds to the situation much better. For example, in September 1929 to July 1932, with the Road. Jones industrial average dropped 89% compared to MIT decrease in the market value of 83% MIT won the same period of the new investors and new capital entering.

So that many investors traumatic 1929 collapse of the right is not fully mature yet the mutual fund industry is a critical examination A post-mortem. Fiasco exposed the noise of the 1920s way of thinking create a closed structure of the defect, Special display open architecture of basic values.

Dream of the New World — Fund in the United States (5)

3,20 1930s, depression and adjustment of the age

1932, the United States won election Franklin. Roosevelt for president, they promised in favor of the adoption of more fund management alternatives to the Republican laissez-faire policy of the Fund. After seven years of adjustment, prosperity and the federal government efforts to enact protective measures, Due to curb 10 laissez-faire caused during the financial service sector have many problems acts. Along with the industry on this legislation, Congress passed the four affected mutual funds are mostly legal.

● 1933 the United States announced the “Securities Act”, covering more common fund much broader scope. The establishment of any public offering of securities rules.

● 1934 the United States announced the “Securities Exchange Act” proposed the publicly traded securities trading rules. Established a sales and the transfer agent must comply with the rules. Transfer agent must in the corresponding government agencies registered.

● 1940 the United States announced the “investment company law.” Detailed specifications of the investment fund management and the composition of the elements, practice of particular concern to the national interest of the public and investors for the adverse effects of eight issues. To provide investors with a complete legal protection, thereby laying a sound investment fund development of the legal basis.

● 1940 the United States issued its “investment adviser law.” Requirements : any common fund to provide investment consulting services to the organization of the Securities and Exchange Commission registration; also the investment adviser and fund companies to make contracts stringent restrictions.

When the 1934 “tax” was promulgated, mutual fund industry is a major tax concessions. “Tax Act” to establish a common investment fund company — which is an official reference to the fund industry 10. first use of this common terminology — to meet the conditions laid down the request, to the Federal government can not pay income tax. Consequently, the more closed-end funds, open-end funds have an obvious edge, thereby promoting their increasingly popular. Closed-end funds in 1929 in about 3 billion U.S. dollars of total fund assets accounted for over 95%. To 1940, the share of closed-end funds dropped to 57%. In 1943, an open-end fund market share over the first closed-end funds an open-end fund and the relative amount of hours has been growing since then.

In this period, the mutual fund industry showed a more modern form of the Fund. During this period, or in 1932 after the establishment of the fund is in what we now call an open-end fund attributes : can be redeemed at any time, without the use of leverage financing business, only to issue different share.

Dream of the New World — Fund in the United States (6)

4, the slow but steady growth in the era : the 1940s to the 1970s

In the next 40 years, the United States fund industry has been slow but steady growth. Fund holdings of portfolio and an increase in the value of investors to buy the increase, the fund management company assets 13% annual growth rate. New fund also increased steadily. From the 1940’s 68 to 1951’s 103 in 1967, to 204; But in 1980, the total number of funds have yet to reach 500. 1970, the United States has 361 investment funds, with total assets of nearly 500 billion dollars, more than 10 million investors.

Entered the 1950s, investment funds to preserve and increase gradually from a savings-type growth direction, People are paying attention to the types of growth-stock investing. 1965 to a 50% investment in the Fund is a stock investment fund to promote the prosperity of the American stock market. 1940 to 1970 period, compared to bank savings, mutual funds almost no growth in 1978. Common Fund total assets of approximately 55 billion U.S. dollars, as compared to the gross domestic product of 230 million U.S. dollars.

To 1960, the Common Fund for the growth of Congress to make the fund industry studies of the new requirements. 1962. 1963 and 1966 by the United States Securities and Exchange Commission investigation and commissioned a survey of the three reports, concern Fund share holders and fund management companies among the potential conflict of interest. These reports urged Congress in 1970 to draft amendments to the 1940 “Investment Company Act” was amended to adjust to a common fund management, particularly of the state of the fund-holder for the protection, prevent fund companies for charging excessive management fees. The 70 amendments to encourage people to Tuozi consultants, the excess charges filed lawsuits played a role.

Dream of the New World — Fund in the United States (7)

Entered the 1970s, the majority of investment funds from closed to open, closed funds have been dwindling. Along with the development of money markets, the emergence of a short-term market funds — money market funds (MMF). It enables long-term investment funds from the long-term investment to short – and long-term type to a balanced mix type. Investment funds are entering the banking business areas, thus breaking the banks and securities division of the barriers. Meanwhile, an open-end fund a number of new features, its products and services becoming more diversified their situation and the scale is also undergone tremendous changes. For example, as early as 1970, most open-end funds are equity funds, the only part of the portfolio, including bonds. By 1972, there have been 46 individual bond and income funds, 1992 reached a further 1,629. Meanwhile, a retired investment tool change to an open-end fund development also played a major role in promoting. In 1974, the retirement account. 1976 is only the first tax-free government bond fund, in 1978. 401 (K) retirement plans and self-employed retirement plan for individuals, These tools will greatly promote the right open-end fund needs. Correspondingly, its services have risen to a new level, investors began to enjoy more of the different services : 24-hour telephone service, computerized account information, regular mail and other shareholders. This also indicates that the open-end fund has a gold rapid development of the coming stage.

Copyright Fund China 2009.

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