Mutual Funds

What is a Mutual Fund?

A mutual fund is an open ended collective investment scheme that can either be actively managed or be passively tracking a given market index. Unlike ETFs, mutual funds trade only once a day. Mutual funds can provide exposure to a wide range of different asset classes and a variety of levels of risk.

Why do you invest in mutual funds?

Mutual funds can allow us to gain well-diversified exposure to a wide variety of markets. We typically use passive mutual funds that provide cost-efficient exposure to a particular market or index.

How do you select which mutual funds to invest in?

Once we have decided that a mutual fund is the appropriate way to gain exposure to a market we undertake a search of all available funds investing in that market and consider which one to select based on the following criteria:

  • The level of assets under management in the fund
  • The way the manager constructs the holdings of the fund
  • The costs of investing in the fund
  • Any style bias the fund may have when investing in the asset class
  • The performance track record and risk levels within the fund

Do you invest in overseas mutual funds?

We will at times invest in both UK onshore unit trusts and open ended investment companies (OEICs) as well as some offshore mutual funds. We ensure that any fund in your portfolio is compliant for retail investors.

Do I pay charges to invest in mutual funds?

Netwealth does not charge any transaction fees for investing in funds and will endeavour to invest in the lowest cost share class available.
There are costs associated with investing in funds: the fund manager will charge a fee for managing the fund and there will be some other costs related to administering the fund. The total charges for investing in funds will vary depending on the type of asset class the fund is investing in and the level of active management. This charge will be taken out of the value of the fund by the fund manager.
We will always take into consideration the total cost of investing when deciding which mutual fund to purchase.