|
By Garry Emmons
For Boston, whose history is better known for its midnight rides and tea parties with attitude, this was, by comparison, a low-key moment. On a slow July day in 1924 in the Hub's financial district, a new investment product was quietly put on the market. It was an inauspicious debut, but over the years, the mutual fund would shake up established norms of wealth creation and distribution in the United States. Indeed, it would help reshape America by uniting Wall Street and Main Street, two disparate worlds that previously had shared little more than a mutual suspicion of each other. Today, 75 years later, both camps benefit enormously from their close ties: the mutual fund is America's investment vehicle of choice, with one in three U.S. households owning a stake in the industry's $5.5 trillion in assets.
"By making the capital markets easily accessible to ordinary citizens, mutual funds have made an important contribution to both the democratization and the strengthening of the American economy," says HBS professor Jay O. Light, an expert on the financial services industry. And now, according to Light and other observers, that "democratization" of capital may be on the verge of another significant advance. For if the mutual fund first empowered the "little guy" by encouraging him to visit Wall Street, the Internet has captured the Street and placed it at his disposal, inside his personal computer.
Earlier in this century, participation by everyday folk in the capital markets was all but unheard of; Wall Street remained an exclusive investment preserve (some would say playground) for America's financial elite. But by making the ownership of securities easy and affordable for people of modest means, mutual funds would over time turn even blue-collar workers into capitalists, and Americans-historically passbook savers-into a nation of investors.
