 Personal Finance PowerPoint Presentation. Family of Funds. Prepare to get financially fit by practicing personal finance. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Most of this information comes from Investopedia Family of Funds, which you can find online. Take a look at the references. Resources continue your research from there. This by James Chan, updated April 30th, 2022. In prior presentations, we've been taking a look at investment goals, strategies, tools, keeping in mind the two major categories of investments. That being the fixed income, typically bonds, the equities, typically the common stock. Also remembering those tools we might be using such as mutual funds, ETFs, possibly helping us to diversify with less of an upfront investment as opposed to investing in individual stocks, individual bonds. Keeping that in mind, we're now asking, what is a family of funds? A family of funds or a 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 investors benefits such as lower cost and sales charges, as well as access to research and investment advice. So if you're thinking, for example, we're thinking Vanguard, if you're on, say, the Vanguard platform, for example, then the funds that are offered there would be in the family of funds, and you might be then thinking, how can you diversify within the family of funds? If you're on the same platform, for example, then you might have lower fees than you might have if you're in, say, multiple platforms, but you want to do your research and you want to make sure that you're diversified to the extent that you feel appropriate. So one more time. 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. Understanding families of funds. A family of funds is managed by a registered management investment company registered with the Securities and Exchange Commission, that being the SEC regulatory body, federal body, under legislation governed by the Investment Company Act of 1940. These companies are credible investment managers regulated by the United States. Management investment companies can offer a broad range of products to investors, including closed-end funds, open-end exchange traded funds, those being the ETS, and open-end mutual funds. So someone or a company like Vanguard has a whole lot of different funds available to them, so it's one place you might be comparing and contrasting to as you're thinking about your investment's goals. So all of the funds offered by an investment company comprehensively constitute its family of funds. The mutual fund directory offers a list of the top 100 mutual funds families by assets under management. So the assets under management giving you the idea of how large the funds are, investing with a family of funds, investing in many funds with a family of funds can provide for many advantages. A fund family can offer, quote, one stop in, quote, shopping for investors. So Vanguard, for example, is quite a large platform. They have a quite large array of funds. You can get fairly diversified, quite diversified, with just the one family of funds in that case. Moreover, some fund families will offer discounts or other benefits to investors who show, quote, brand loyalty, end quote, and invest across several of an investment company's funds. So you want to kind of compare and contrast on that in terms of note that if you're in a fund like a Vanguard family of funds, then you can get broad diversification by using different mutual funds and index funds and so on and so forth. But then still, of course, all your, you got a lot of investment in one investment company. So you might try to think, well, maybe I should have funds in multiple investment companies just in case of maybe security reasons. One gets hacked or something like that. So you can look into that as kind of an option or whether or not you would want to invest in multiple fund families, for example. But if you're going with one fund family and you have a large amount of investments there, then, of course, they might give you more benefits like a bank might do, for example, as you are utilizing more of their services. So 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 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, those being the ETFs, and any closed-end funds offered. So you got a wide range of mutual funds and the ETFs, which are traded kind of more similarly to how stocks are traded. So 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 and one monthly statement showing all their investments with the fund family. So that's kind of nice, of course, because now you can get a lot of diversification using, say, Vanguard or something like a Vanguard, and then you can get all of your statements that can consolidate all of the stuff into one report. That makes it a little bit easier to see what your asset grouping is. So remember, like, if you're in something like a Vanguard, you still have the option of saying, well, do I want to have, say, one mutual fund that is well diversified or do I want to have multiple mutual funds, for example, and attempt to have my own mix that is optimal for my investment desires? But either way, if it's in the same platform, Vanguard can give you one statement and they might more easily be able to tell you where your overall investment is by percentage basis is a little bit more easily. If you have multiple different platforms and you're using multiple families of funds, the issue with that is that it can be a little bit more difficult to see what your percent allocation is to particular categories. You can use tools, one tool is like a personal capital tool, which is an investment company, but they have a tool that allows you to kind of link to your institutions and there's other software that can allow you to do that so that they can try to pool your investments together so you can see what the percent allocation is through all of your investments and help you to weight your investments. The other thing, again, you want to kind of consider is do you want all your investments with one institution, even if you can diversify with the funds, or maybe do you want multiple institutions just to diversify between institutions? I wouldn't think that Vanguard would go bankrupt or anything like that, but maybe you still want others. Maybe there's your concern about security risks or something like that, so maybe you would want multiple funds for that reason as well. And in any case, exchanging funds, investors with broadly diversified portfolios through a single fund family can also benefit from fund exchanges, which are typically allowed with minimal or no fees. Do it yourself, investors, especially enjoy the advantage 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. So if you have all your investments in one area, in one family of funds, it might make it a little bit more easy for you to shift those funds around. So remember, you could be having your strategy, it might be that you have one fund that's a targeted fund and it's going to basically shift your percentages as you get closer to retirement, or you might have multiple funds, which you're trying to then balance out and use your own kind of strategy, and then as you get closer to retirement, for example, you might want to reallocate those funds, or as the funds start generating revenue, they're going to get off-kilt in terms of your asset allocation. So you might want to then be exchanging or reallocating your funds, which could be easier to do if you're all in one fund family, for example. So investment research. 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 financial topics, while also maintaining awareness of the company's offerings and investment options.