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It Happened One Day in 1924

The oldest Indian mutual fund may be 38 years old, but the mutual fund concept itself is 78 years old. Massachusetts Investors Trust, the first ever open-end fund is still going strong. Check out for more on how this fund looks like

When the first Indian mutual fund, US-64, was launched, the oldest fund in the world was already forty years old. That is not surprising—financial markets in a roughly modern form actually started further back than you'd probably imagine. The oldest stock exchange in the world—Amsterdam—would have been exactly 400 years old this year had it not merged with the Paris and Brussels bourses two years ago.

The New York Stock Exchange, by contrast, is positively young, having been around for a mere 210 years. Actually, even our own BSE isn't really a laggard—it can trace its roots back for more than a century.

While the erstwhile Amsterdam exchange lives on only as part of the Euronext market, the oldest mutual fund is still going strong since 1924. Interestingly, this fund—Massachusetts Investors Trust (MIT)—has been open-ended since the beginning. When the fund marked its 75th anniversary in 1999, its assets had grown from US$ 50,000 at launch to US$ 12 billion, a growth of 240,000 times.

Looking at the fund's early history, it is apparent that the mutual fund idea caught on quickly—in just first year, the fund had grown to US$ 392,000 in assets. The investment style and strategy of the Massachusetts Investors' Trust, hasn't changed much over the decades.

It still has a relatively conservative approach and invests largely in blue chips. One stock that was there in MIT's 1924 portfolio—General Electric Co—was still there at its 75th birthday. In 1924, MIT owned five General Electric shares valued at $1,161 while its modern GE holding represents around 1.7 per cent of its portfolio.

One of the more interesting aspects of MIT's original 1924 portfolio is the nomenclature followed, for what we'd today call the sectoral break up of its holdings.

There appear to be only three sectors in the portfolio. There's railroads and railroad equipment, which is the biggest chunk; there's utilities and there are what was called 'industrial and miscellaneous', which encompasses almost everything that many modern portfolios have.

There was obviously no technology sector and financial services—which is the biggest sector in the modern MIT portfolio—were represented by a handful of shares of two insurance companies. Some of the leading lights of the 1924 portfolio—American Radiator, National Lead and Baldwin Locomotive—do not even exist today. Any guesses about what an Indian diversified equity fund's portfolio would look like in, say, 2050?