Mutual fund history

A Mutual fund is a group of securities from several corporations, which are owned and managed in one fund, by another group or corporation, known as a fund manager. An individual investor can then choose the mutual fund package that has already been pre selected for his or her investing needs.

Mutual funds were first created in Belgium in 1822. They spread France and Great Britain and made their debut in the United States in the 1920's. Open-end mutual funds are the most popular and have continued to grow since World War II, with a particularly big period of growth in the 1980's and 1990's.

Like any investment, you need to know the history of the mutual fund, and you will need to ask important questions about whether or not this particular mutual found is the right one for you. Past performance is always a good indicator about how a mutual fund is doing, what it can do in the present and how well it is managed. Here are some of the research questions you will need to ask and find out about.

The main questions you need to have answered about mutual fund performance history:

What is the purpose of the mutual fund, what are its goals and what kind of securities does it purchase to meet those goals?

Who or what organization runs this mutual fund and how much are they charging?

What is the price history? Is the fund performing well when you compare it to the other funds of the same category and how well does it perform on the open market?

How big is the risk in investing in this mutual fund, does the fund bring in stable gain or is it very volatile?

Mutual funds are ranked according to how they perform compared to their peers and how well they do in the industry. There are ranking companies such as MorningStar, which evaluates the overall performance of mutual funds. Mutual funds are usually given a rating from 1 to 5. In this system the 10 percent of mutual funds with the greatest performance record will get a 5 star rating and the bottom 10 will get a 1 star rating. Mutual funds are rated at the three year, five year, and 10 year period and then are given an overall rating. Mutual funds that are less than three years old will not be rated. Ratings are based on performance that is why they are not rated and subsequently ranked within the first three years.