Many consumers like to stick to the brands they've grown to trust, and the same concept holds true in the world of investing. A family of funds is a group of mutual funds that are all marketed and administered under the same fund family or company name. There are several benefits to staying with one mutual fund family for your investment needs.
It's all in the family
Most mutual fund companies offer investors a selection of funds to choose from in order to cover different markets and cater to varying investment needs. Some investors, for instance, might seek mutual funds that take a more aggressive, growth-oriented approach, while others seek funds that are more low-risk and conservative. That's why fund families often play a key role in customer retention. As an example, two well-known companies that offer various mutual funds under the same family are Vanguard and Fidelity Investments.
Benefits of investing within the same mutual fund family
Investors are often motivated to invest within the same fund family because they've established a certain comfort level with the company that offers those investments. If, for example, you've had a good experience investing with Company X and are looking to add a mutual fund with a different strategy to your portfolio, then you may be inclined to go with another one of Company X's funds, rather than try your luck elsewhere.
Tracking your investments is also a bit easier when you invest within a single family of funds, because you'll typically receive a single statement that covers your investments in each of the individual funds you hold. This is more convenient than gathering and comparing different statements from various sources.
Furthermore, if you stick to the same fund family, you'll often be allowed to move your money from one mutual fund to another without incurring any fees. Similarly, some funds might allow you to invest in other mutual funds within the same family at lower minimum levels, thus broadening your investment options. In rare cases, you might even get an opportunity to invest in a closed mutual fund that isn't accepting new investors.
Drawbacks of investing within the same mutual fund family
There aren't too many disadvantages to keeping your money in the same fund family. In some cases, sticking to the same family might mean limiting your investment choices, but most of the larger companies that offer different mutual funds have a wide range of options for investors.
Once you establish a comfort level with a certain company, it's natural to want to keep your business there. As long as you find that a particular family of funds offers different options that meet your objectives, there's no reason not to keep your money in the family. Just be sure to do your homework and see if there's a superior competing option -- or even a new family for you to join.
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