Supermarkets take on a new look

A US phenomenon is about to hit the UK that could end the headache of choosing the right investment fund and, crucially, there are no extra charges.

Choosing the right fund to invest in is a perennial headache. Do you go to an Independent Financial Adviser (IFA) for advice? Should you pay them a fee, or commission on the fund you buy? Or perhaps you should go "door to door" directly to the investment companies themselves in order to sample their wares.

Choosing the right fund to invest in is a perennial headache. Do you go to an Independent Financial Adviser (IFA) for advice? Should you pay them a fee, or commission on the fund you buy? Or perhaps you should go "door to door" directly to the investment companies themselves in order to sample their wares.

All this might soon be a thing of the past, thanks to a US phenomenon about to hit the UK - the online investment fund supermarket.

These consist of internet-based services enabling investors to buy a variety of investment funds from different companies through just one account. In many ways they are similar to self-select PEPs or ISAs except, crucially, they carry no extra charges for investors, as the development of fund supermarkets is being paid for by the fund companies themselves.

Jason Hollands, of financial advisers Best Investment, says: "There are several benefits to investing through a fund supermarket. Firstly, they offer an immense choice of investments. In the past, investors have had to stick to one PEP or ISA provider each year yet few fund management companies are strong in every area so this results in compromises between performance and the need to get a broad exposure across different markets."

Mr Holland says: "By allowing you to mix and match the products from different companies under one account, a fund supermarket enables you to concentrate on the very strongest funds in each company's range."

He adds that a second major advantage of fund supermarkets is that, like Sainsbury's, Tesco or Asda, they offer convenience. There are a number of aspects to this. By having the products of numerous companies located on one website you can more easily compare them against each other. Moreover, the ability to transact with a simple Switch or Delta card and the click of a mouse is much quicker than completing paper forms, writing cheques and then relying on the vagaries of the postal service. This will be of particular benefit at the end of the tax year when a simple postal delay or mistake in not signing a cheque can result in you loosing your ISA allowance altogether.

With fund supermarkets you have the ability to get your ISA completed as late as 11.59pm on 5 April - one minute before the end of the tax year!

The highest profile launch of a fund supermarket so far in the UK has been by Fidelity, the US-based fund giant, which has just unveiled FundsNetwork at www.fidelity.co.uk. Other companies are set to follow. FundsNetwork sets out to provide web-literate consumers with as much analytical firepower and latest comparative market data as possible so they can make an informed decision on what fund they want to buy, at the best price.

The service will offer ISAs (Individual Savings Accounts) and access to OEICs (open-ended investment companies) from more than 14 different fund managers, as well as more than 250 unit trusts. The scope for growth is enormous. There are currently some 1,800 investment funds in the UK and Fidelity says the "ideal" would be to offer the investor access to the entire market.

Other supermarkets are set to open in the UK. The Prudential's online subsidiary, Egg (www.egg.com), has already launched a service. Charles Schwab, the US-owned discount stockbroker, is lining up to launch its own UK funds supermarket soon and Virgin expects to join the fray with its version in the summer.

According to a director of Fidelity, Paul Kafka, the typical upfront cost of an ISA fund in the UK is between 3.25 and 5.25 per cent. He says in his new operation the cost is 1.25 per cent or less: "It's nothing short of revolutionary. In three or five years time most fund transactions will be carried out through supermarkets."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
PROMOTED VIDEO
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Travel
travel
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations should be regarded as an offensive act
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
arts + ents
Arts and Entertainment
arts + ents
News
people
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Morrissey pictured in 2013
people
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    1st Line Support Technician / Application Support

    £20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

    Team Secretary - (Client Development/Sales Team) - Wimbledon

    £28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

    Accountant / Assistant Management Accountant

    Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

    Day In a Page

    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices