WEALTHTRACK
As Mutual Funds Mark Their 100th Anniversary, Do They Still Work for Investors?
Jul 25, 2024
Morningstar's mutual fund expert Russ Kinnel discusses the evolution of mutual funds over 100 years, the impact of ETFs, and the active vs. passive investing debate. They also explore the rise of major fund companies like Vanguard and innovations in actively managed ETFs and crypto ETFs.
25:48
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Quick takeaways
- Mutual funds provide diversification and transparency, ensuring safer investments for individuals.
- ETFs offer tax-efficient solutions and intraday trading flexibility, especially in well-liquid areas.
Deep dives
Evolution of Mutual Funds and ETFs
The mutual fund industry, which originated in 1924 with Massachusetts Investors' Trust, revolutionized investing by allowing ordinary individuals access to professionally managed diversified portfolios. This democratization expanded to various investment vehicles, including index funds, exchange-traded funds (ETFs), and target-date funds. Despite facing scandals and regulatory changes post-2003, the industry has upheld fiduciary values and continues to cater to investor needs, with ETFs gaining popularity for their lower costs and tax efficiencies.
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