Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-11
INVESTMENT TRUST
MOVEMENT GROWS.
Trading Corporation, Started
In England, Has Made Re-
markabIe Progress.
Nv the Associated Press.

BY the Associated Press.
NEW YORK, February ia finan-
cial SNOWFALL started in England at the
close of the American Civil War, has
gathered up six billions OF capital DUR
ing its 66-year roll.
PanicS and depressions have wrought
changes in the appearance of this
giant-the investment truSt-but even
the plunge from the precipice in the
Autumn of 1929 did not shatter the
idea that is the nucleus of the move
ment This, in brief, is the pooling OF
small investors resources so as to give
the person of moderate means the ad-
vantages of the large capitalist, through
extensive diversif1cation and distribu-
ton of risk.
Just now. the oldest and most numer-
aus trlists-those of the management
type-are counting the costs OF the
great def1ation and suffering from a
public disfavor which followed their
losses in asset value. The shrinkage,
however, annual reports for 1880 snow,
varied greatly, chiefly because OF dlfter-
ences in securities held ana the skill
of arrangements in anticipating market
trends.
Extent Of Losses.
Enough earnings and condition state
P,nents have been published to indicate
that the average asset loss suffered py
the larger management trusts was
slightly less than IS per cent, whereas
the decline during 1880 in the 30 COM
mon stocks used in the Standard STA
fistics Co.'S index was 28.5 per cent.
part If the difference is accounted for
by the fact that the trusts added bonos
and preferred stocks to their portfolloS.
The most notable change in the IN
vestment trust field has been the growth
of the fixed trust. Whereas the mani
apement of the other type has the right
to buy and sell as it sees 1t, the spon-
sors of the fixed trust are strictly I'M
tied in their activity.
The investment portfolio IS conhneo
IN q comparatively small number Oh
securities, mostly prominent common
stocks, and the list cannot be changed
excent under specific conditions named
in the indenture. The fixed trust gets
its income from the DIVIDENDS on It's
holdings. a..
Although this form of trust made its
debut in 1924, its greatest growth mas
been in the last year, or since the 1879
stock market crash. Scores OF these
Investment companies were organized
in 1880, until their number is now
around 100, representing capital OF
about 81 600 900 600. So rapid has been
the development that the Chicago Curb
Exchange has called a conference OF
fixed trust representatives to perfect an
organization to handle their mutual
problems.
Trust Purchasing Large.
Wall Street is particularly interested
IN one aspect of this movement. AS the
fixed trusts multiply and grow they
participate more actively in the stock
market to add to thsir portfolios, since
for each unit Of their own securities
they must have a supporting unit OF
common equities. The securities bought
by the trusts are purchased outright
and taken out of the market. Already
the volume Of this business has become
considerable,
General management trusts trace
their descent to the Foreign & Colonial
Trust, formed in England in 1865. From
this pioneer has sprung long line OF
companies, many Of which, particularly
those in this country, differ substanti-
ally from their ancestor in scope Of
operations.
The mushroom rise of trusts in the
United States was feature of the bull
market. On the strength of that wild
speculative wave investment companies
of many forms were put out in large
numbers and American investors poured
S2,400, O00,00 Of capital into their
securities from January to October, 1929.