A fund supermarket is a bit like having a Tesco or Sainsbury’s for investment funds and products in that it’s where you can buy and sell hundreds of different products and funds at low cost.
It is typically a website where you open an account and can pick and choose funds from different companies as you would food off the supermarket shelf. Similar to real life supermarkets, the online funds available have different ranges of services on offer and size and cost vary greatly.
The main attraction of a fund supermarket is that you can access literally hundreds of funds all from one place and you can usually buy them online fairly easily.
Pros
- A one stop shop for a large number of funds and products like units trusts, OEICs and ISAs.
- Discounts and lower commission.
- Buy online and sell online.
- View and manage your portfolio online (for products bought through the fund supermarket).
- Paperwork and admin is minimal and all contact and communication will come via the fund supermarket.
Cons
- Lack of human contact.
- You’ll be buying without advice.
- You’ll have to do all the research yourself and be sure about what you’re buying.
There are benefits of course, the range of products and discounts for one. But you must be 100% sure that you know what you’re buying as you’ll get no advice.
If the savings potential is a huge draw for you and you’re sure you know what you’re doing, or if you get advice first and are advised to buy a fund through a fund supermarket – it could work for you.
Fund supermarkets have been popular in the US for some time now and are increasing in popularity in the UK. You’ll find adverts for them in the financial press and they’re easy to find on the internet.
Check who you’re giving money to – you wouldn’t just give your money to anyone, and investing is no different. Make sure you know the company and understand the product your money is going to.
Make them work for you – often the websites offer alerts on new funds or rates so make sure you get on the list and let them keep you updated.
Do your homework – even if fund supermarkets aren’t for you they’re a great way to compare products and prices.
Get advice – if you’re at all unsure, get advice before you decide anything.
