First Idea

Even historians are uncertain of the origins of investment funds, the earliest records show that the father of investment funds could be a king of Netherlands, William I in 1822, however some record show that it was a Dutch merchant named Adriaan van Ketwich in 1774.
Some historians have an opinion that the first Adriaan’s guild, Eendragt Maakt Magt (“Unity Creates Strength”), which idea was to invite subscriptions from small investors to form an investment trust (Negotiatie), may have given idea to the Dutch king to create one officially.

Unity Creates Strength

In today’s terminology Eendracht Maakt Magt was a closed-end trust (more on the fund types later in future articles). It had an initial capitalization of about 1 million guilders divided over with 2000 shares with a par value of 500 each, and promised a statutory dividend of 4 percent per annum to its shareholders. By early 1775, almost all shares were placed and became freely tradable on the Amsterdam exchange.
To avoid a conflict of interest, Van Ketwich was not personally involved in the daily investment decisions, but only managed the administration of the fund.
The initial success of Eendragt Maakt Magt invited followers. In 1776 a consortium of Utrecht bankers founded Voordeelig en Voorsigtig (“Profitable and Prudent”), and in 1779 Van Ketwich started his second trust under the name Concordia Res Parvae Crescunt (“Small Matters Grow by Consent”).
Things did not go as planned: A war with England caused default of colonial bonds and sharply reduced investment income. Van Ketwich suspended share redemption in 1782, and several years later lowered promised dividend payments. In 1824, Eendragt Maakt Magt was finally liquidated.

Rolling on…

However, some businessmen from Switzerland saw that the Dutch experiment created diversification and helped to tap the investing niche not available before – middle class with lower income; then Scots followed the example in 1880s and created a numerous amount of such trust funds.
It seems like a good idea will always find the followers…
The idea of creating a pool of resources and decreasing risks by spreading them among a big amount of smaller investments finally attracted British businessmen, who spread it in United States in 1890s in such short amount of time.

*Compiled from different sources, including Wikipedia

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