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Mutual Funds History

History

Mutual funds are “pooled investments,” strictly meaning that they combine contributions from many different people under an investment compa-ny and then purchase a portfolio of assets for the benefit of shareholders (also known as “Collective Invest-ment Schemes”).

The concept of pooled investing dates back to the late 1700s in Eu-rope, when a Dutch merchant and broker invited subscriptions from investors to form a trust to allow small investors with limited means to participate in larger investments.1 Typical-ly, these structures required investors to keep their money within the pool for the entire lifespan of the company, and the actual investments made were often concentrated in one industry or even one company.

The Massachusetts Investors Trust created the first “open-end” fund in Bos-ton in March, 1924, introducing important changes to the investment com-pany concept in the process, including a simplified capital structure, con-tinuous offering of shares, ability to redeem shares rather than hold them until dissolution of the fund, and a set of clear investment restrictions and policies.2 This became the blueprint for many open-end mutual funds to-day, in the Caribbean and elsewhere.

 

By the end of 2016 in the United States, investment companies man-aged a whopping $19.2 Trillion in net assets on behalf of investors in vari-ous types of funds (including Mutual Funds, Exchange Traded Funds, Closed-end Funds, and Unit Invest-ment Trusts).

 

However, the lion’s share of this total—or $16.3 Trillion—was managed within mutual funds.

These numbers dwarf the total amount of assets invested in Caribbean-based mutual funds, estimated to be approximately $2.2 billion today. Nev-ertheless, the usefulness of the mutual fund structure as an effective and flexible financial planning tool for most investors transcends national boundaries.

Types of Mutual Funds

Three types of structures operate as investment companies: open-end funds, closed-end funds, and unit investment trusts. Although only open- and closed-end funds are offered in the Bahamian Dollar market, several other types of funds are commonplace elsewhere.

Important Documents

There are several important documents that mutual fund subscribers should understand. Offering Memorandum. A mutual fund that offers its shares to the public is required to produce an official Offering Memorandum (OM) and to typically file it with t...

Regulations & Structure of Mutual Funds

Mutual funds in the Caribbean are governed by country-specific legisla-tion and regulations that reflect the objectives and concerns of the host country. They are required to fulfill all of the obligations related to licens-ing, reporting, audit, and operation that are prescribed in the legisl...

Funds Work

Many individuals are familiar with bank term deposits and how they work. A fixed time period and a fixed interest rate make your eventual re-turn easy to calculate up front: $100,000 @ 4% interest for one year will earn $4,000 of interest and result in a balance of $104,000 at the end of that ...

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  • ABV Investments Incorporated ABV  + 0.02
  • Banks Holdings Limited BHL  + 4.85
  • Barbados Dairy Industries Limited BDI  + 3.00
  • Barbados Farms Limited BFL  + 0.40
  • BICO Limited BCO  + 3.10
  • Cable and Wireless Barbados Limited CWBL  + 2.29
  • Cave Shepherd and Company Limited CSP  + 4.65
  • Emera Deposit Receipt EMABDR  + 22.35
  • Eppley Caribbean Property Fund SCC - Dev Fund CPFD  + 0.16
  • Eppley Caribbean Property Fund SCC - Value Fund CPFV  + 0.60
  • FirstCaribbean International Bank FCI  + 2.65
  • Goddard Enterprises Limited GEL  + 3.25
  • Insurance Corporation of Barbados Limited ICBL  + 3.20
  • One Caribbean Media Limited OCM  + 2.60
  • ROYAL FIDELITY PREMIUM INCOME FUND MF  + 1.62
  • ROYAL FIDELITY SELECT BALANCED FUND MF  + 5.64
  • ROYAL FIDELITY STRATEGIC GROWTH FUND MF  + 1.05
  • Sagicor Financial Corporation Limited SFC  + 2.80
  • West India Biscuit Company Limited WIB  + 32.75

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