Financial experts point to market history showing stocks recording the best investment performance the past seven decades. From 1925 to 1995, large company stocks produced an annual return of 10.5 percent, far outdistancing Treasury bills and long-term government bonds, according to Ibbotson Associates in Chicago. In 1997, stock funds returned 24.4 percent, according to Lipper Analytical Services. Over the past three years, the cumulative performance is a stunning 95.3 percent. Such lofty results are a mixed blessing, according to mutual fund leaders.
Companies are under enormous pressure to have funds that perform well.
Investors need to temper their expectations. Markets are going to go down. The mutual fund industry traces its roots to 19th century London, where the Foreign and Colonial Government Trust offered investments spread over a number of different stocks. The first modern mutual fund was introduced 74 years ago. The industry's future was shaped by Congress in 1940 after lawmakers established the most important laws governing mutual funds and investor protection.