Fund Supermarkets - Let Us Help You Find the Right Fund

Fund supermarkets’ are often mentioned in the financial media, but what exactly are they? Put simply, they help investors who wish to transfer Individual Saving Accounts (ISAs) and Personal Equity Plans (PEPs) to find a cost-effective way to improve the range of investments in their portfolios, although this is only one reason for using them. The crucial thing is that funds from many different managers can be held under one plan manager.

Piling high, selling cheap

Fund supermarkets first appeared in America and are now becoming increasingly popular here. They work just like food supermarkets, with a wide range of different products from different companies on their shelves. As an investor you compare all the goods (funds) and select as many as you want. Then you simply pay for them, often taking advantage of the big discounts that the supermarkets can offer because of their policy of bulk buying – effectively piling goods high and selling them cheap.

Fund supermarkets work just like food supermarkets, with a wide range of different products from different companies on their shelves.

Second thoughts

Fund supermarkets offer their own version of an exchange policy to keep investors happy. So if you have second thoughts and decide at any time that one of the funds you bought was a mistake or no longer suits your needs, you can move the money into a different fund – again, often at a substantial discount to the normal reinvestment fees (switch costs are low but not negligible).

Getting help

The choice of goods (funds) on offer in a fund supermarket can be bewildering, as you have to weigh up the differing claims of a wide selection of products, from those with big brand names to those from less well-known providers. An IFA will be able to provide you with a complete independent analysis, so that any new investment or transfer is based on sound financial research.

What should you put in your basket?

Follow our guide to using fund supermarkets.

1 Fund supermarkets offer unit trusts and OEIC funds from scores of different fund managers. Talk to an IFA who will help you select the most appropriate solutions from the hundreds of different funds now available.

2 Having discussed your requirements, an IFA will be able to apply vital tests to the products you are considering buying. These include researching the fund’s investment objectives and checking the credentials of the fund manager. We check the fund’s yield and compare it with rival funds, especially if you are investing for income. They can also consider charges and any discounts you may get through the supermarket. As a final consideration, they will look at how the fund or funds will fit in with any existing investments you may hold.

3 In this particular example, an IFA would then suggest to you the most appropriate model portfolios, whether you are a new investor or a seasoned investor considering an ISA or PEP transfer.

An independent financial adviser can help you successfully navigate the aisles of the fund supermarket and pass through the checkout, leaving all the stressful decisions to us. Please speak to an IFA for further information.