Why it May be Best to Invest Through a Fund Supermarket

City of London

As the new tax year approaches, it’s time to make decisions on which investment companies to make use of in the coming year, especially given the restrictions placed upon the number of ISA providers that can be subscribed to in a single year.  This year I will be personally changing my approach and moving to a fund supermarket and here is why.

Diversifying A Portfolio Through a Fund Supermarket

In the first case, fund supermarkets tend to offer a much wider range of funds to invest in than other forms of investment companies who focus upon their own funds.  For example while the fund supermarket Fidelity offer their own range of products and funds, opening an account with the institution means that the investor is able to invest in fund managed by a whole range of providers thus allowing for greater diversification.  This is especially useful for UK investors looking to hold multiple funds without diversifying outsideof an ISA.

Investment Cost Reduction Through Fund Supermarkets

While many investors will suffer from having to pay both an initial charge and an annual management fee, the fund supermarket is one way in which the cost of investing may be lowered.  In many cases fund supermarkets offer a reduced initial charge and in some cases it is possible to see the initial investment fee waived altogether. 

Investors should however be cautious as in some cases the initial investment fee of a fund is levied through the spread, the difference between the buy and sell price of a fund.  In such a case even a 0% initial change on the behalf of the fund supermarket will mean that there is no true discount.

Consolidating Investments in a Fund Supermarket

The major advantage of a fund supermarket may be seen as the ability to see one’s entire portfolio in one place, this can save significant amounts of time and effort if making use of a large number of fund providers.  Not only do fund supermarkets allow investors to place money with a large number of providers, most fund supermarkets offer a consolidation service allowing investors to transfer existing funds and ISAs into the account with minimal or no fees at all.

So if you are looking for an easy way to invest in a diverse range of funds in one place, the benefits of a fund supermarket may considerable and worthy of further investigation.  However, before making the leap, be sure to research the provider before placing your money considering whether cost savings are genuine and whether the range of products and services offered meet your individual investment needs.