Investment companies should not be confused with investment platforms such as eToro, Robinhood, Fidelity and E-Trade, which are digital services or tools that enable investors to access and manage various financial instruments such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, futures, cryptocurrencies, and real estate.
[5] The first investment trusts were established in Europe in the late 1700s by a Dutch trader who wanted to enable small investors to pool their funds and diversify.
This is where the idea of investment companies originated, as stated by K. Geert Rouwenhorst.
For example, the Foreign and Colonial Government Trust formed in London in 1868 provided small investors the advantages of diversification previously only available to the wealthy.
The 1929 stock market crash and Great Depression temporarily hampered investment funds.
A number of innovations then led to steady growth in investment company assets and accounts over the decades.
The act governs investment company capital, custody of assets, transactions with affiliates, and fund board duties.
In 1938, it authorized the creation of self-regulatory organizations like FINRA to oversee broker-dealers.