Today’s infographic comes to us from StocksToTrade and it showcases the basics around mutual funds, including their history, typical structures, why people invest in them, and how fees usually break down.
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The birth of the mutual fund goes all the way back to 1774, when Dutch merchant Adriaan van Ketwich first pooled the resources from a number of small investors to form a trust called “Eendragt Maakt Magt” (“unity creates strength”), which lasted for 50 years and set the stage for what is now a $40.4 trillion industry globally.
Unlike the very first mutual fund (closed-end) most common funds today (86%) are open-ended. These funds buy back or sell their shares at the end of each day based on the net asset value (NAV) of securities, and these open-end funds accounted for $16.3 trillion of assets under management (AUM) in the U.S. at the end of 2016. Closed-end funds and unit investment trusts (UITs) make up the rest of the mutual fund market, and of course the fast-growing ETF sector makes up a growing piece of the wider U.S. fund industry as well.
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