Do you know which was the first investment fund in history?
Updated:
12 JUN, 2025
Netherlands, XVI-XVII century. In an era when investing was reserved exclusively for the wealthiest and financial institutions, a revolutionary idea was about to change the course of economic history. In this article, we will explore the birth of the first investment fund ever conceived and how this bold financial instrument opened the doors of investment to individuals of all social classes.
What was the first investment fund in history?
This question sparks a debate among historians: on one hand there are those who believe that the idea was of the king William I of the Netherlands, who created the Fixed Capital Investment Companies (SICAF); on the other hand, there are those who think that the original idea on which the monarch based himself was of the Dutch merchant Abraham Van Ketwich, who years before had created the Eendragt Maak Magt.
What were the Fixed Capital Investment Companies of the Netherlands
In 1822, King William I created in the Netherlands the Fixed Capital Investment Companies, a primitive form of investment funds whose goal was to promote the economic development of the country.
These companies issued shares that investors, public and private, could purchase: the money collected was used to finance ports, canals, roads and other infrastructures to stimulate the national economy; in return, shareholders received dividends, the amount of which depended on the profits generated by their investments.
What was the Eendragt Maakt Magt?
But was William I's idea truly original? According to many experts, the monarch might have been inspired by a trust fund called Eendragt Maakt Magt (Unity is Strength) launched in 1774 by Abraham Van Ketwich, a Dutch merchant.
Van Ketwich, a witness to the stock market crash caused by the failure of the English East India Company, decided to establish a trust to allow small investors to purchase debts from various companies, thus diversifying their investments and mitigating risks. Van Ketwich served as the fund manager, while the commissioners in charge of the negotiation were Frans Jacob Heshuysen and Dirk Bas Backer, who oversaw the investment policies.
Currently, a copy of the 'prospectus' of the Eendragt Maakt and the share certificate are kept in the archives of the municipality of Amsterdam. Thanks to these documents, we know that the fund promoted the continuous diversification of the portfolio, with the 2,000 shares divided into 20 classes, each with a capital invested in a portfolio of 50 bonds and composed of at least 20-25 different securities. The portfolio was divided into “classes”, each represented by 100 bearer participation certificates, with a nominal value of 500 florins.
Furthermore, the documents indicate that investors were guaranteed a dividend of 4%, subject to changes based on the annual performance of the portfolio's investments. With a fixed number of shares (2,000), the Eendragt Maakt would today be classified as a closed investment fund.
However, the outbreak of war with England led to the non-payment of colonial bonds, causing a significant impact on the income of the Eendargt Maak Magt. After a few years, Van Ketwich was forced to reduce the amount of dividends and, at the end of the 18th century, the fund disappeared from the Amsterdam stock exchange register, with share prices available only in irregular private auctions. Finally, the fund was liquidated in 1824.
What was the first regulated investment fund?
After these early experiences of collective investment vehicles, it was not until 1868 that the first regulated investment fund appeared, the "Foreign and Colonial Government Trust", in London.
However, the first fully comparable open investment fund to today's funds did not appear until 1924, when MFS launched the Massachusetts Investment Trust, a fund still active today.
