What Is a Family of Funds?
A family of funds (or fund family) includes all the separate funds managed by a single investment company. For instance, all of the mutual funds offered by Vanguard would be part of the same family of funds. Investing broadly across different funds from the same family of funds can offer investor benefits such as lower costs and sales charges, as well as access to research and investment advice.
- A family of fund refers to the set of mutual funds managed by a particular investment management firm.
- These may include mutual funds of various investment strategy and asset class.
- Investors that invest among a family of funds may find it easier to have a one-stop-shop and may receive additional benefits and discounts.
Understanding Families of Funds
A family of funds is managed by a registered management investment company. Registered with the Securities and Exchange Commission (SEC) under legislation governed by the Investment Company Act of 1940, these companies are credible investment managers regulated by the U.S.
Management investment companies can offer a broad range of products to investors including closed-end funds, open-end exchange-traded funds (ETFs) and open-end mutual funds. All of the funds offered by an investment company comprehensively constitute its family of funds.A list of the top 100 mutual fund families by assets under management can be found here.
Investing with a Family of Funds
Investing in many funds within a family of funds can provide for many advantages. A fund family can offer “one-stop” shopping for investors. Moreover, some fund families will offer discounts or other benefits to investors who show 'brand loyalty' and invest across several of an investment company's funds.
Management investment companies, such as Vanguard or Fidelity, offer investors a wide range of fund options and services. Open-end funds can be purchased and managed through a Vanguard account, allowing an investor to build out a comprehensive portfolio of open-end funds with various objectives. Vanguard also provides brokerage services which allow investors to buy the firm’s exchange-traded funds (ETFs) and any closed-end funds offered. Ultimately, an investor with Vanguard could choose to make all of their investments with Vanguard building out a broad portfolio with only Vanguard funds. This investor would be able to receive consolidated fund investment reports in one monthly statement showing all their investments with the fund family.
Investors with broadly diversified portfolios through a single fund family can also benefit from fund exchanges which are typically allowed with minimal or no fee. Do it yourself investors especially enjoy the advantages of exchanging funds within a fund family.
Investors can use exchange privileges to shift allocations in changing market environments. With some fund families investors can also automate exchanges which can be beneficial for retirement planning. Exchanging funds can help investors mitigate risk. Exchange privileges can also allow an investor to exchange into more conservative funds or cash funds as they near retirement.
The advantages of investing with a fund family can also go beyond an investor’s invested funds. Most fund families also offer investment research, news on current events, and alerts on new products and offerings. Investment research from a fund family can be a great way to stay informed on a wide range of personal finance topics while also maintaining awareness of the company’s offerings and investment options.