Investment trusts;

              Bulletin H A S K I N S & SELLS 57
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Investment Trusts
I—SURVEY
A RECENT estimate (New York Eve­ning
Post, August 31, 1929) places the
number of investment trusts operating in
this country at 450, employing a total
capital in excess of 32,000,000,000.00.
New trusts formed in the first two weeks
of September would probably result in
revising this figure upward to $2,500,000,-
000.00 with more to come.
This represents a sensational growth,
practically all of it since 1921, when one
of the important pioneers, the Inter­national
Securities Trust of America (pre­decessor
of International Securities Cor­poration
of America) was formed. The
industry grew very slowly up to 1924. In
the succeeding four years it increased
rapidly, up to an estimated capital at Janu­ary
1, 1929, of 31,000,000,000.00, and since
that date it has gone forward by leaps and
bounds. Records compiled by the Com­mercial
& Financial Chronicle show that
of the new corporate issues brought out in
the first seven months of 1929, $1,100,000,-
000.00 were those of investment trust and
holding companies. This constituted about
one-sixth of all the new financing done
during that period. In July the new issues
by investment trusts and holding and
trading companies totaled $222,000,000.00
and in August investment trust financing
in stock issues alone totaled $341,000,-
000.00.
It has been estimated that 75% of the
total funds of our investment trusts are in­vested
in common and preferred stocks,
this proportion representing a considerable
increase during the current year owing to
the fact that foreign markets have pre­sented
less inviting opportunities than
heretofore. One survey indicated that
about 16% of the total capital was repre­sented
by liquid assets. This would in­dicate
that the trusts are carrying at times
upward of $300,000,000.00 in cash and
loans on call.
By comparison, it is interesting to note
that the distribution at July 31, 1929, of an
investment fund exceeding $1,000,000,-
000.00 of one of the great life insurance
companies showed about 44% in real estate
loans, 15¼% in policy loans, 37½% in
bonds, 2½% in preferred stocks, ½% in
common stocks, and ¼% in cash. The
proportion of preferred stocks will un­doubtedly
increase as it was only recently
that a change in the New York laws per­mitted
life insurance companies to invest in
preferred stocks and guaranteed common
stocks fulfilling certain requirements.
The oldest and best-known group of
American investment trusts is that
managed by American Founders Corpora­tion.
Published reports show that at
November 30, 1928, the portfolio of the
three principal supervised companies of
this group, excluding intercompany hold­ings,
was about $103,000,000.00, of which
58% was in bonds, 5% in preferred stocks,
23% in common stocks, and 14% in cash
and call loans. The management has
announced that the total resources of this