What is a fund supermarket?

Although not a new concept, the idea of a fund supermarket is becoming increasingly prominent in the investment world.

Fund supermarkets stock a wide range of funds, although are unlikely to have all of the investment products available at any one time.

It is also a channel that is used for showing how transactions have been distributed online by an intermediary, enabling investors to keep an eye on their portfolios. Furthermore, the facility gives interested parties a one stop shop where they can view the most up-to-date information on holdings and transactions, no matter what time of the day it is.

What are the advantages of a fund supermarket?

In many cases, fund supermarkets are considered to be a convenient means of overseeing investments, especially for those who have money in various funds.

Although the use of the term 'supermarket' may seem odd at first, an understanding of these products soon sheds light on why it is used. Many funds available through these channels are on the market at discounted prices and investors have their pick of an extensive selection. A typical fund supermarket may have around 700 products in total for people to choose from. It is this sort of wide scale ability that gives fund supermarkets their popularity, as investors can literally see hundreds of funds that may appeal to their needs.

For those hoping to take out an ISA, fund supermarkets give the opportunity to select several funds and place them in the same savings vehicle. This is usually allowed to occur without an extra charge and gives added flexibility that would not be achievable through a direct sale. If an ISA is purchased directly, it is usually the case that only products from that particular fund manager can be paid in - a situation that can be avoided through a fund supermarket.

Anyone who purchases their investments from a fund supermarket then has the freedom to buy and sell as they please. In many cases, it is cheaper to switch investments in this way than it would be in any other situation.
Investments can also be made through fund supermarkets in writing as well as online, so applicants do not need to be technologically literate in order to reap the benefits.

Is a fund supermarket for me?

As with any investment decision, there are aspects of using a fund supermarket that people need to take into account before making a commitment. For example, a fund supermarket cannot offer financial guidance, so the expertise of a professional advisor may be needed prior to making any decisions.

Further to this, people may need to consider whether they can transfer investments to another fund supermarket if they are unhappy with the service they receive. In some cases, this may incur a charge, which is something else worth considering.

As has already been suggested, fund supermarkets do not show investors all the options available on the market, but merely a selection. If a consumer has questions about the product they intend to purchase, it is worth seeking out a service that offers a telephone helpline in order to clear up any difficulties.

One of the main advantages of a fund supermarket is that it saves investors the hassle of phoning up individual managers to see what prices they can offer products at. People are also equipped with the tools they need to select the right funds and allocate assets, therefore giving them maximum control of their finances.

With many investors recognising the benefits of fund supermarkets, now is the time to investigate further and see what benefits they can bring. With information readily available in just one location, investors may find fund supermarkets a much more efficient way of running their portfolios.