What Price Stress-Free Investing?

Editor's Views: One-stop-shop investing via fund-of-funds may be cheaper than you think, and how parents are spending their money during lockdown

Holly Black 14 August, 2020 | 11:25AM

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A fund-of-funds is an incredibly attractive investment option. Why painstakingly construct your own portfolio of funds and have to concern yourself with diversifying and rebalancing when there’s a one-stop shop where an expert fund manager takes care of it all for you? Yes, the appeal is easy to see, but the problem is that fund-of-funds can be so damn pricey.

When you choose one of these funds you’re effectively being double charged: you’re paying the fund manager, but you’re also paying all of the managers of the funds he invests in. Factor in your fund supermarket charge on top of that and you can easily end up paying an annual fee of 2% or more. The effect of that on your returns over time is huge.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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