Back to Funds of funds

Funds of funds have become a popular investment vehicle amongst investors and financial advisers alike, for good reason, as they offer a number of benefits.

Key benefits of funds of funds

Diversification
A fund of funds offers you a one-stop solution to the problems of fund selection and diversification. Investments are spread across a range of funds, which the funds of funds managers believe are likely to be the best performers in the market.

An ideal core holding
A balanced portfolio will usually contain a number of funds, giving you access to a broad range of markets and sectors. A fund of funds, however, can be an ideal single core fund for any investor, providing a ready-made and diversified portfolio of holdings within one easy investment.

Actively managed
Funds of funds are actively managed. The managers continually research the industry and assess the investment environment on your behalf. This kind of research and fund selection requires a great deal of time and expertise which is not available to most investors.

Balance/risk management
By investing in a fund of funds, you can spread your investment risk across a broad range of funds, meaning your portfolio is not dependent on just one fund, asset class or geographical region.

Consolidation tool
Over time, you may have accumulated a portfolio of individual funds that are no longer meeting your investment goals, or may simply be underperforming. If this is the case, consolidating your existing investments into a fund of funds can bring balance, focus and performance potential back to your portfolio.

Tax efficiency
Within a fund of funds, the manager can switch funds as often as is necessary without having to pay any Capital Gains Tax (CGT). The only time CGT may become a factor is when you come to sell the fund itself and your profits exceed your annual CGT allowance at that time.

Downloads:

 Jupiter Merlin Portfolios
 Jupiter Merlin Portfolio Brochure

NOTE:
Please remember that the value of an investment in a fund of funds and the income from it may fall as well as rise and may be affected by exchange rate variations. Charges tend to be higher than for conventional unit trusts to allow for a proportion of the charges applicable to the underlying funds. On average this works out at around 0.9% of the net asset value per annum.