Personal Finance: Fund Supermarkets Have Plenty to Shop around for; City Pundits Believe That Two Thirds of All Financial Services Transactions Will Be Undertaken Via Electronic Means in 15 Years

The Birmingham Post (England), November 1, 2003 | Go to article overview

Personal Finance: Fund Supermarkets Have Plenty to Shop around for; City Pundits Believe That Two Thirds of All Financial Services Transactions Will Be Undertaken Via Electronic Means in 15 Years


Byline: Peter Axon

Although the past three years have been a most dismal time for small investors, at the same time an exciting development has become available for the benefit of shareholders -the fund supermarket.

Supermarkets killed off corner shops with a combination of discounted prices, convenience and choice.

Now a range of online fund supermarkets provide the ideal opportunity to gain with a mix of low charges and easy and cheap switching between investments.

They offer a flexible package which can be tailored to individual needs and the online providers have won almost universal approval within the retail financial services industry. Many independent financial advisers and investment houses claim that the advent of web-based fund stores has revolutionised both the scope and speed of investment operations in the UK.

It would seem that this system is here to stay, which makes 'shopping' for investors more profitable when setting up a plan.

Supermarkets have already proved an excellent one-stop vehicle for collective (pooled) investment schemes -notably unit trusts.

The key advantage of a fund supermarket is that it lets you combine a wide range of funds, from different management groups all in one ISA.

Just like a normal supermarket, you can fill your ISA basket with the funds of your choice, proceed to the 'checkout' and have them wrapped up in a single ISA. Furthermore, you possess an efficient transfer facility for your existing share-based plans.

Reorganising your holdings can cost you next to nothing and cuts down on the paperwork, as your investments are in one place. You will receive one statement comprising all your PEPs and ISAs, rather than a separate statement for each.

Indeed, many thousands of investors have already benefited through this simple and cheap administrative framework. And, of course, people have been so pleased to see investment fund purchase restrictions lifted.

In essence, the supermarket provider becomes the ISA provider, just as Asda or Sainsbury's label their own goods, even though they do not make them. Fund supermarkets are thus designed to let you buy, view and manage all year investment schemes through one internet site, instigating the need for junk mail, direct debit mandates and a host of other irritations.

Nevertheless, some small private investors still think that fund supermarkets are specifically geared towards institutional investors, that is, the big market players. But this isn't the case.

Many funds allow you to start with a minimum investment of just pounds 500. Following the worst of the world economic recession, the personal finance service sector is eager to encourage people to join the shareholding fray -even if this is through the purchase of pooled investment plans. …

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