How to Buy From a Fund Supermarket

If you're looking to create an investment portfolio with a little variety, your best bet may be to buy from a fund supermarket. These brokerage firms offer investors the opportunity to purchase funds from a wide range of fund families in one place. Furthermore, shares purchased through a fund supermarket come with lower fees than those purchased through a broker. Find out more about fund supermarkets and learn how to evaluate which one is best for your investments.

Instructions

Difficulty: Challenging

Things You’ll Need:

• Fund supermarket
• Internet access

Understanding a Fund Supermarket

1. Understand how fund supermarkets work. Fund supermarkets are not as impartial as they may seem on the surface. The firm will have an interest in specific funds, and it will offer perks to investors purchasing these funds through the supermarket. Other funds pay anywhere from 0.25 percent to 0.35 percent to have their products featured on a fund supermarket.
2. Find out about transaction fees right away. Most fund supermarkets will sell shares of their own funds without a transaction fee. Shares for other fund families will have a transaction fee, however.
3. Work with a fund supermarket that is easy to navigate. The point of the fund supermarket is simplicity.
4. Ask about redemption fees. Some fund supermarkets charge a 1 percent fee for early redemption to encourage investors to hang onto their funds.
5. Learn about the services offered by fund supermarkets. Some funds offer supplemental tax reports, while others prefer to give their investors a wide range of business services.
6. Look for ways to invest in special funds. It is common for fund supermarkets to offer lower minimum investments, which opens up a lot of formerly financially prohibitive funds to individual investors.
7. Study the privacy policy of the supermarket. In the majority of cases, your private information is guarded from everyone outside of the supermarket, including your fund manager. However, it's better to confirm the privacy policy ahead of time.
8. Search the supermarket for the funds you're interested in. Some supermarkets have over 1,000 different funds available to help you make your decision.
9. Buy your shares directly online. Every reputable fund supermarket has secure online ordering.

Tips & Warnings

• Due to the high volume of transactions processed through a fund supermarket, there is a chance you won't receive the annual reports on your investments. To make sure you stay up-to-date on your fund's yearly review, request a copy by using the contact information found on your prospectus.