The Role of Independent Fund Directors: 60 Years Ago and Today

Congress enacted the Investment Company Act of 1940 to address perceived abuses in the mutual fund industry, primarily resulting from overreaching by investment advisers and sponsors to the detriment of fund shareholders. At the time, the fund industry was tiny by today’s standards: In 1941, there were some 141 registered mutual funds with assets of $440 million (about $89 billion in today’s dollars); by the end of 1961—just after the 20th anniversary of the 1940 Act and a critical historical junction—those numbers had grown to 344 mutual funds, with assets of about $24.4 billion (about $250 billion in today’s dollars).