History and Future of Investment Funds

Investment funds are investment vehicles in which multiple investors come together to form a common pool that is managed by a professional portfolio manager within an institutional structure.

Investment funds are investment vehicles in which multiple investors come together to form a common pool that is managed by a professional portfolio manager within an institutional structure. With a history spanning 250 years, the global fund industry today manages trillions of dollars in assets and serves as an essential investment platform for both individual and institutional investors. This article discusses the historical development of investment funds, analyzes the structural dynamics of the modern fund industry, and explores future trends in light of changes in investor behavior and advancements in technology.

Historical Development of Investment Funds

The origins of investment funds date back to 1774 with the establishment of the Eendragt Maakt Magt fund by Dutch financier Adriaan van Ketwich. The fund’s foundational structure was based on the principle of risk diversification, which aligns with modern portfolio theory.

In the 19th century, following the Industrial Revolution, investment funds spread rapidly in the United Kingdom, where the first steps toward institutionalization in the fund industry were taken. In the first half of the 20th century, investment funds experienced significant growth in the United States. The first modern investment fund in the U.S. is considered to be the Massachusetts Investors Trust, established in 1924. In 1976, the creation of the first index fund by John C. Bogle opened the door to major innovations in the fund industry.

After 1990, the widespread adoption of the internet and increased access to information contributed significantly to the growth and diversification of investment funds.

Investment Funds Today

Today, the total size of global investment funds exceeds 70 trillion dollars. Funds are categorized into groups such as bond funds, money market funds, equity funds, balanced funds, alternative funds, and ETFs. They serve as a primary investment tool for both individual investors and institutional players such as pension funds and insurance companies.

In recent years, passive funds have been on the rise. Due to their lower costs and typically lower market volatility compared to active funds, passive strategies continue to gain prominence. Sustainability-themed funds have also seen substantial growth. Funds managed according to environmental and social responsibility criteria attract strong interest from investors.

Funds that include different asset classes—such as multi-asset, balanced funds, and fund-of-funds—have gained increased attention. Rising uncertainty and volatility in global markets push investors toward diversified structures that hold multiple asset types.

As BV Portföy, we closely monitor the evolving investor behaviors and market dynamics of recent years and update our fund design processes in parallel with this transformation. With shifts in risk perception, increased interest in thematic fields, and the growing need for diversification, we are transforming our product range into a more flexible, accessible, and data-driven structure. In doing so, we aim to offer modern and sustainable fund solutions aligned with the expectations of both individual and institutional investors.

The Future of Investment Funds: Possible Trends

Algorithmic funds, which are already becoming widespread today, are expected to take the lead in fund management as the use of artificial intelligence grows. With machine-learning-based forecasting models, algorithmic portfolio construction will become a core component of future fund structures. This transformation will reduce fund costs and enable faster, data-driven investment decisions.

Blockchain technology makes it possible to tokenize fund units. The continuous trading capability and cost advantages enabled by tokenization signal a new era for the global fund industry, allowing funds to reach a much broader global investor base.

Interest in thematic funds is expected to continue increasing. Funds that invest specifically in areas such as artificial intelligence and renewable energy are likely to draw even more attention from investors in the future.

Personalized portfolio management and the widespread adoption of robo-advisors are also anticipated. Instead of being placed into broad categories, investors will be offered customized portfolios tailored to their individual behavior patterns and risk appetites.

Investment funds, with a history spanning more than 300 years, have played an important role in the deepening of financial markets. While the rise of passive funds is evident today, artificial-intelligence-supported fund products and the advantages brought by tokenization are expected to be at the forefront in the future.

As BV Portföy, we carefully monitor passive investment strategies for investors prioritizing long-term return stability, evaluating their cost advantages and consistent performance profiles. We continue analyzing the global rise of passive investing and its potential impact on local markets, offering low-cost and transparent investment options that help investors manage their portfolios more efficiently—particularly in volatile market conditions.

With its 300-year history, the investment fund industry remains one of the most essential components of the financial system. Today, the industry continues to transform—ranging from the rise of passive funds to sustainability-themed products and AI-supported management models—requiring a new vision for both investors and portfolio management companies.

As BV Portföy, we closely follow this transformation and continue to develop technology-driven, risk-managed, and theme-focused solutions for our investors.