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45-684: The SPI is Switzerland's most closely followed performance index. It is used as a benchmark for mutual funds , index funds and ETFs , and as an underlying index for derivative financial instruments such as options , futures and structured products . In 2020, the SPI, along with other SIX indices, was endorsed under the EU Benchmarks Regulation and is registered with the European Securities and Markets Authority , which means that it can be used as an underlying for financial products sold in

90-409: A limited life span, established at creation. Investors can redeem shares directly with the fund at any time (similar to an open-end fund) or wait to redeem them upon the trust's termination. Less commonly, they can sell their shares in the open market. Unlike other types of mutual funds, unit investment trusts do not have a professional investment manager. Their portfolio of securities is established at

135-496: 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. 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 . The first open-end mutual fund with redeemable shares

180-644: A mutual recognition regime that allows funds regulated in one country to be sold in all other countries in the European Union, if they comply with certain requirements. The directive establishing this regime is the Undertakings for Collective Investment in Transferable Securities Directive 2009 , and funds that comply with its requirements are known as UCITS funds. Regulation of mutual funds in Canada

225-480: A net asset value based on the value of the securities held in the funds. In the United States, at the end of 2019, assets in money market funds were $ 3.6 trillion, representing 14% of the industry. Bond funds invest in fixed income or debt securities. Bond funds can be sub-classified according to: In the United States, at the end of 2019, assets in bond funds (of all types) were $ 5.7 trillion, representing 22% of

270-443: A subfund investing called UK smaller companies and another subfund called UK equity income . Each subfund has its own investment aims and is held separately from other subfunds within the same OEIC. This has some cost savings for the investment manager. OEICs are open-ended ; the fund is equitably divided into shares which vary in price in direct proportion to the variation in value of the fund's net asset value . Each time money

315-449: A substitute for bank savings accounts , though money market funds are not insured by the government, unlike bank savings accounts. In the United States, money market funds sold to retail investors and those investing in government securities may maintain a stable net asset value of $ 1 per share, when they comply with certain conditions. Money market funds sold to institutional investors that invest in non-government securities must compute

360-522: A trust named Eendragt Maakt Magt ("unity creates strength"). His aim was to provide small investors with an opportunity to diversify. 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 . One of the earliest investment companies in the U.S. similar to

405-403: Is invested new shares are created to match the prevailing share price; each time shares are redeemed the assets sold match the prevailing share price. In this way there is no supply or demand created for shares and they remain a direct reflection of the underlying assets. OEICs may be single-priced (there is one price at which shares may be bought or sold) or dual-priced, in which case there will be

450-466: Is now called the "Vanguard 500 Index Fund" and is one of the largest mutual funds. Beginning the 1980s, the mutual fund industry began a period of growth. According to Robert Pozen and Theresa Hamacher, growth was the result of three factors: 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

495-636: Is primarily governed by National Instrument 81-102 "Mutual Funds", which is implemented separately in each province or territory. The Canadian Securities Administrator works to harmonize regulation across Canada. In the Hong Kong market mutual funds are regulated by two authorities: In Taiwan, mutual funds are regulated by the Financial Supervisory Commission (FSC). Mutual funds in India are regulated by Securities and Exchange Board of India ,

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540-507: Is targeted at different investors, with hedge funds being available only to high-net-worth individuals. At the end of 2020, open-end mutual fund assets worldwide were $ 63.1 trillion . The countries with the largest mutual fund industries are: At the end of 2019, 23% of household financial assets were invested in mutual funds. Mutual funds accounted for approximately 50% of the assets in individual retirement accounts, 401(k)s and other similar retirement plans. Luxembourg and Ireland are

585-539: The net asset value (NAV) computed that day based upon the prices of the securities owned by the fund. In the United States, open-end funds must be willing to buy back shares at the end of every business day. In other jurisdictions, open-end funds may only be required to buy back shares at longer intervals. For example, UCITS funds in Europe are only required to accept redemptions twice each month (though most UCITS accept redemptions daily). Most open-end funds also sell shares to

630-708: The "ECA Regulations". The Securities and Investment Board (predecessor to the FCA ) regulations, the Financial Services (Open-Ended Investment Companies) Regulations 1997 were approved by the SIB Board on 16 January 1997 and came into effect as from that date. The first commercial OEIC was launched by Threadneedle Asset Management in 1997. These regulations only allow investment in transferable securities (e.g., listed securities, other collective investment schemes , or certificates of deposit ). This ensured that OEICs fell within

675-626: The 1990s it was felt that the UK government should allow a corporate form that could repurchase its own shares without the standard restrictions in the Companies Act . The Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996 first introduced the OEIC, on 11 November 1996 which came into force on 6 January 1997. They were enacted under the European Communities Act 1972 section 2(1) and were therefore known as

720-838: The EU. The underlying share universe of the SPI is the Swiss All Share Index and includes approximately 230 equity issues. For a company's shares to be included in the SPI, the company must be domiciled in Switzerland and the shares must have a free float equal to or greater than 20%. In 1998, investment companies were taken out of the SPI Family and put into the specially designed Investment Index in order to avoid double (direct + indirect) listing of SPI components. Exceptions to this rule can be granted to Investment Companies that invest in companies not primarily listed at SIX. The SPI acts in turn as

765-499: The SPI 20. The SPI is divided into sectors on the basis of economic activity. This classification is based on the Industry Classification Benchmark ICB from Dow Jones and FTSE , which simplifies international performance comparisons significantly. SPI Stocks are also grouped by security category: registered shares, bearer share, participation certificates. Paid prices are taken into account in calculating

810-725: The SPI Large, the SPI Middle and the SPI Small. Two more subindices cover Large+Middle as well as Middle+Small. The SPI 20 is another SPI subindex that contains the same companies as in the Swiss Market Index . It mostly overlaps with the SPI Large, but does not fully coincide because of the rules specific to the SMI. For this reason, another subindex, the SPI Extra , includes all SPI companies not in

855-465: The SPI as a whole. If no paid prices are available, the index is calculated on the basis of bid prices. The index is recalculated and published every three minutes. On 1 June 1987, the SPI was standardised at 1000 points. The Swiss All Share Index contains all companies primarily listed at SIX that are headquartered in Switzerland or the Principality of Liechtenstein. It has 232 components. These are all

900-556: The SPI components, but also equity with less than 20% of free float and investment companies. The additional companies contained in the Swiss All Share Index are listed below, as of November 12, 2019. The following table shows historic milestones of the Swiss Performance Index Total Return. Latest seen values are not final: italic indicates that the value may be seen again if the bear market (-20% from

945-517: The United Kingdom. The terms "OEIC" and "ICVC" are used interchangeably with different investment managers favouring one over the other. In the UK OEICs are the preferred legal form for new open-ended investment over the older unit trust . As an open-ended company the manager must create shares when money is invested and redeem shares as requested by shareholders. As with other collective investments,

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990-429: The United States, the principal laws governing mutual funds are: Mutual funds are overseen by a board of directors if organized as a corporation, or by a board of trustees , if organized as a trust. The Board must ensure that the fund is managed in the interests of the fund's investors. The board hires the fund manager and other service providers to the fund. The sponsor or fund management company often referred to as

1035-807: The automatic inclusion of an ICVC under the UCITS directive allowing scope for non-UCITS investments (e.g., money market funds, property funds and funds of funds). The changes ensure a level playing field for unit trusts and OEICs. The FSA was split into two during 2013 and the FSA became the Financial Conduct Authority (FCA) for small and medium-sized firms with the Bank of England taking on responsibility for larger firms with systemic impact. An OEIC can act as an umbrella scheme holding various sub-funds each with their own investment goals. For example, one OEIC may hold

1080-488: The creation of the UIT. In the United States, at the end of 2019, there were 4,571 UITs with combined assets of less than $ 0.1 trillion. Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering . Their shares are then publicly listed. Investors who want to sell their shares must sell their shares to another investor in the market; they cannot sell their shares back to

1125-463: The development of open-end mutual funds (as opposed to closed-end funds). 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. The introduction of money market funds in

1170-431: The fund manager, trades (buys and sells) the fund's investments in accordance with the fund's investment objective. Funds that are managed by the same company under the same brand are known as a fund family or fund complex. A fund manager must be a registered investment adviser . In the European Union, funds are governed by laws and regulations established by their home country. However, the European Union has established

1215-442: The fund's investment objective, investment approach and permitted investments. The investment objective describes the type of income that the fund seeks. For example, a capital appreciation fund generally looks to earn most of its returns from increases in the prices of the securities it holds, rather than from dividend or interest income. The investment approach describes the criteria that the fund manager uses to select investments for

1260-442: The fund. Bond, stock, and hybrid funds may be classified as either index (or passively-managed) funds or actively managed funds. Alternative investments which incorporate advanced techniques such as hedging known as "liquid alternatives". Money market funds invest in money market instruments, which are fixed income securities with a very short time to maturity and high credit quality. Investors often use money market funds as

1305-427: The fund. The price that investors receive for their shares may be significantly different from NAV; it may be at a "premium" to NAV (i.e., higher than NAV) or, more commonly, at a "discount" to NAV (i.e., lower than NAV). In the United States, at the end of 2019, there were 500 closed-end mutual funds with combined assets of $ 0.28 trillion. Mutual funds may be classified by their principal investments, as described in

1350-448: The globe include the SICAV in Europe ('investment company with variable capital'), and the open-ended investment company (OEIC) in the UK. Mutual funds are often classified by their principal investments: money market funds , bond or fixed income funds , stock or equity funds , or hybrid funds. Funds may also be categorized as index funds , which are passively managed funds that track

1395-570: The high-interest rate environment of the late 1970s boosted industry growth dramatically. The first retail index funds 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. Sinquefield's fund had $ 12 billion in assets after its first seven years. John "Mac" McQuown also began an index fund in 1973, though it

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1440-536: The industry. Stock or equity funds invest in common stocks . Stock funds may focus on a particular area of the stock market, such as Open-ended investment company An open-ended investment company (abbreviated to OEIC, pron. /ɔɪk/ ) or investment company with variable capital (abbreviated to ICVC) is a type of open-ended collective investment formed as a corporation under the Open-Ended Investment Company Regulations 2001 in

1485-958: The issuer at the net asset value of each share as of the close of the trading day in which the order was placed, as long as the order was placed within a specified period before the close of trading. They can be traded directly with the issuer. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The advantages of mutual funds include economies of scale , diversification, liquidity, and professional management. As with other types of investment, investing in mutual funds involves various fees and expenses . Mutual funds are regulated by governmental bodies and are required to publish information including performance, comparisons of performance to benchmarks, fees charged, and securities held. A single mutual fund may have several share classes, for which larger investors pay lower fees. Hedge funds and exchange-traded funds are not typically referred to as mutual funds, and each

1530-472: The main function of OEICs is to make money for their shareholders. This is achieved via investing in different asset classes such as equities , fixed-interest investments, and property. By using economies of scale they facilitate access to professional investment management for small investors. OEICs were developed to be similar to European SICAVs and U.S. mutual funds . While historically, unit trusts were favoured legal vehicles for investment, in

1575-507: The peak) persists; parentheses indicate that the value will be seen again if we reenter a bull market (maximum value reached again); Other values may be seen again in case of a crash (assuming a threshold of -50%). Mutual funds A mutual fund is an investment fund that pools money from many investors to purchase securities . The term is typically used in the United States , Canada , and India , while similar structures across

1620-447: The performance of an index, such as a stock market index or bond market index , or actively managed funds, which seek to outperform stock market indices but generally charge higher fees. The primary structures of mutual funds are open-end funds , closed-end funds , and unit investment trusts . Over long durations passively managed funds consistently overperform actively managed funds. Open-end funds are purchased from or sold to

1665-533: The primary jurisdictions for the registration of UCITS funds. These funds may be sold throughout the European Union and in other countries that have adopted mutual recognition regimes. The first modern investment funds , the precursor of mutual funds, were established in the Dutch Republic . In response to the financial crisis of 1772–1773 , Amsterdam-based businessman Abraham (or Adriaan) van Ketwich formed

1710-422: The prospectus and investment objective. The four main categories of funds are money market funds, bond or fixed-income funds, stock or equity funds, and hybrid funds. Within these categories, funds may be sub-classified by investment objective, investment approach, or specific focus. The types of securities that a particular fund may invest in are set forth in the fund's prospectus , a legal document that describes

1755-401: The public every business day; these shares are priced at NAV. Open-end funds are often referred to simply as "mutual funds". In the United States at the end of 2019, there were 7,945 open-end mutual funds with combined assets of $ 21.3 trillion, accounting for 83% of the U.S. industry. Unit investment trusts (UITs) are issued to the public only once when they are created. UITs generally have

1800-993: The regulator of the securities and commodity market owned by the Government of India, under the SEBI (Mutual Funds) regulations of 1996. The functional aspect of Mutual Funds industry comes under the purview of AMFI , a trade association of all fund houses. Formed in August 1995, the body undertook the Mutual Funds Sahi hai campaign in March 2017 for promoting investor awareness on mutual funds in India. There are three primary structures of mutual funds: open-end funds , unit investment trusts , and closed-end funds . Exchange-traded funds (ETFs) are open-end funds or unit investment trusts that trade on an exchange. Open-end mutual funds must be willing to buy back ("redeem") their shares from their investors at

1845-563: The scope of the Undertakings for Collective Investment in Transferable Securities Directives ( UCITS ). With the advent of a single regulator, the FSA, the previous regulations were replaced by the Open-Ended Investment Companies Regulations 2001 under the Financial Services and Markets Act 2000 section 262. These changes brought the formation of OEICs under control of the FSA and removed

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1890-608: The universe of several other indices offered by SIX Swiss Exchange: Below is the list of the 214 SPI shares as of September 18, 2020. Some of the companies are primarily listed in Switzerland, but have their headquarters outside Switzerland and were included in the underlying share universe upon request. Some companies have two kinds of shares and thus appear twice in the SPI. SPI components are classified by size, by sector as well as by security category. There are three size categories of SPI components: large-cap, mid-cap and small-cap. Three SPI subindices reflect these sizes, respectively

1935-648: Was established on March 21, 1924, as the Massachusetts Investors Trust, which is still in existence today and managed by MFS Investment Management . In the U.S., there were nearly six times as many closed-end funds as mutual funds in 1929. 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. These new regulations encouraged

1980-517: Was part of a large pension fund managed by Wells Fargo and not open to the general public. 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. John Bogle was another early pioneer of index funds with the First Index Investment Trust, formed in 1976 by The Vanguard Group ; it

2025-645: 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. Though reported to regulators, BaFin never commented on these results. Like other types of investment funds, mutual funds have advantages and disadvantages compared to alternative structures or investing directly in individual securities. According to Robert Pozen and Theresa Hamacher, these are: Mutual funds have disadvantages as well, which include: In

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