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"A balanced fund seeks to provide long-term growth through its equity component as well as income to be generated by the portfolio's debt securities" (Galvin).
3. Factors Generating Changes in the U.S. Secondary Market for Common Stock
The exchange of financial products expanded significantly since the 1960s as a direct consequence of the growing interest in stocks, bonds and other types of investments. Trading financial products is no longer destined only for specialized investors, but also for the general public and the growing interest of the public generated major changes. Then, the volatility of the initially issued securities also increased as these could be sold and purchased more times. This movement also led to the expansion of the secondary market for common stocks, but also to a growing need for a stricter and clearer legislation.
Third, another factor generating change was the growing number of securities that were issues and could be traded. Secondary markets for instance also "exist for other securities as well, such as when funds, investment banks, or entities such as Fannie Mae purchase mortgages from issuing lenders" (Investopedia, 2009). The increasing circulation of these new mortgage securities (and the more recent mortgage-backed securities)...
Fourth, the secondary market itself constituted a force for future changes. With high rates of success and the creation of well paid additional jobs within the economy, the secondary market generated a growing need for expansion and the inclusion of more and more participants, both financial specialists as well as clients.
References:
Allen, F., Santomero, A.M., The Theory of Financial Intermediation, The Wharton School, University of Pennsylvania, 1996, Retrieved from http://fic.wharton.upenn.edu/fic/papers/96/9632.pdf on May 13, 2009
Galvin, W.F., What You Should Know about Mutual Funds, Secretary of the Commonwealth of Massachusetts, http://www.sec.state.ma.us/sct/sctprs/prsamf/amfidx.htm last accessed on May 13, 2009
Gorton, G., Winston, A., Financial Intermediation, The Wharton School, University of Pennsylvania, 2002, Retrieved from http://fic.wharton.upenn.edu/fic/papers/02/0228.pdf on May 13, 2009
Secondary Market, Investopedia, 2009, http://www.investopedia.com/terms/s/secondarymarket.asp last accessed on May 13, 2009
Types of Mutual Funds, Nature Magics, 2009, http://www.naturemagics.com/finance/mutual-funds-types.shtm last accessed on May 13, 2009
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