Fund supermarkets

Fund supermarkets are a useful resource for investors. While they don't offer every fund, fund supermarkets can put funds from several providers in the same ISA (individual savings account).

One of the latest ideas to cross the pond is the fund supermarket. These have been in operation in the US for many years now but they only started to spring up here in the UK in 2000.

How fund supermarkets work

The name somewhat gives it away. It's a place where you can go to pick any sort of investment fund. Previously most funds were sold either through financial advisers or bought direct from the fund management company itself. However, because of the volume of funds that these supermarkets sell they can often offer some attractive discounts on the initial charges. These charges can be 5%-6% if you are buying direct. With a fund supermarket you might pay only a third of that.

What's available through a fund supermarket

Most fund supermarkets won't offer every single fund that is on the market, so if you have a specific fund in mind (perhaps in a specialist area) you might find it is not available through a fund supermarket. Like food supermarkets, fund supermarkets tend to offer only the most popular funds. They stack them high and sell them cheap.

Many supermarkets offer somewhere in the region of around 400 to 500 funds. This makes it simpler to choose a fund and many of them will have tools to help you choose the fund that is right for you. Some even offer telephone helplines, if you prefer the personal touch.

The big advantage to fund supermarkets

One final advantage that these supermarkets have is the ability to choose funds from several providers and put them in the same ISA. If you buy a fund directly you can usually only put funds from that fund manager into your ISA. A fund supermarket ISA allows you to mix and match, usually at no extra cost.

Back to main ISAs page »