Charges:check the TER

EdInvestor

Observer article

Read the small print! You can pay as much as 3% on some "funds of funds." This will eat up 22% of your contributions in 10 years.

dunstonh

It says Manager of Manager funds in the article. Not fund of funds.

Although FoFs do generally charge more as well. The issue with FoFs is that they are targetting the small investor and giving full diversification to people who do not invest enough to be able to diversify enough themselves. You should be expected to pay extra for that because there is more work involved. However, the greater potential for growth over the long term should make up for it.

I would say that someone investing over £10-£15k shouldnt need a fund of funds as there is enough there to build their own sector spread.

As the article isnt focusing on fund of funds it doesnt mention the positives and of course with everything there is usually positives and negatives.

If a fund charges an extra 1% a year but has a return that is 2-3% average a year better than you are better off. I repeat what I have said before, would you be happier turning £1000 into £2000 over 5 years but paying 2% or turning £1000 into £1300 and paying 0.5%?

cheerfulcat

The issue with FoFs is that they are targetting the small investor and giving full diversification to people who do not invest enough to be able to diversify enough themselves.

A good generalist investment trust will do the same job for much less.