Family of Funds – Definition

Cite this article as:"Family of Funds – Definition," in The Business Professor, updated December 10, 2019, last accessed October 20, 2020,


Family of Funds Definition

A family of funds refers to a group of funds whose marketing and administration activities are facilitated by a single investment company. It provides people with a wide range of investment options. Generally, most people will always prefer to be loyal to the brand they trust. It is a concept that exists in the investment world too. By investing widely under the same family of funds, you will definitely experience a number of benefits.

A Little More on What is a Family of Funds

Companies that deal with mutual fund offers a number of fund options to investors. By doing so, they are able to cater for their different investment needs. The options also ensure that investors are likely to seek mutual funds taking a more growth-oriented approach and aggressive.

On the other hand, other investors seek funds that are more conservative and low-risk. It is the reason why the family of funds often plays a crucial role as far as customer retention is concerned. Fidelity and Vanguard Investments are a few examples of companies offering various funds under the same family.

A family of funds is under the administration of the registered management investment company. It is registered with the Securities and Exchange Commission (SEC) under law governed by the Investment Company Act of 1940. These are companies with credible investment managers who are regulated by the United States. Generally, management investment companies offer investors a number of products such as:

  • Closed-end funds
  • Open-end exchange-traded funds
  • Open-end mutual funds

Note that all of the funds that investment companies offer are comprehensive, and they constitute a family of funds.

What are the Advantages of Investing in Family of Funds?

  • The family of funds does motivate investors to invest in the same fund family. The reason is that they have a certain level of comfort and trust in the companies that offer such investments.
  • With a family of funds, it is easy for investors to track their investments because all the investments are in the same family fund. Investors receive only one statement that covers all of the investments they hold in the investment company. This is more convenient because an investor doesn’t have to gather and compare statements coming from different investment companies.
  • Also, sticking to one family fund allows investors to move their funds from one mutual fund to the other free of charge.
  • In addition, some funds allow investors to put their money in other mutual funds in the same family at a relatively minimal level. The move broadens investors’ investment options.
  • Though in rare cases, an investor is likely to get a chance of investing in a closed mutual fund that is not bringing onboard new investors.

Disadvantages of Investing in Family of Funds

As there are advantages of investing in a family of funds, this investment option also comes with a few flaws. For instance, when you stick to one family fund, it will limit the choices you have for investment. It is likely to happen when you invest in a company with limited mutual funds options.

Generally, it is normal for investors to keep their business in the same investment company once they develop trust with that company. If the company is giving them a wide range of investment options, there is no reason why investors should not invest in the funds.

However, it will be wise for investors to do a bit of research. It will enable them to know if there are other investment companies with better options and superior competition that they can join.

References for “Family of Funds › Investing › Mutual Funds › Investing › Investing for Beginners › Mutual Funds

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