In the first instance Morrison’s, Tesco and M&S have all posted profit alerts and seen significant declines in sales, indicating that customers are becoming ever more selective and refusing to hand over money out of a sense of loyalty alone.
This is market economics at its best; supermarkets will inevitably respond to spending signals and innovate, offering new and more attractive goods and services.
The same process is occurring in the way in which we invest in funds using funds supermarkets, which have recently seen fees tumble for everyday investors.
In decades past when an investor wanted to place their savings in an investment fund or spread their nest egg across several funds often paid a large commission to a fund manager or a bro-ker.
In most instances it is hard to see exactly what investors get in return for these fees, with man-aged funds on average failing to out perform, or even worse, under performing compared to other investment vehicles.
A fund supermarket is a platform, normally online, that allows the investor to place their money in a range of funds.
The investor can use one account and invest in dozens of funds, keeping their own personal funds in an ISA or other tax efficient savings account.
The fund supermarket is also where fund managers or brokers also go to find funds to invest in, and previously they were able to arrange their own charges with the supermarket.
The costs of fund supermarkets have fallen recently due to new government rules forcing them to make their charges clearer.
Typically, a charge of about 1.5 percent (working out at £300 per £20,000 investment) was be-ing levied, which over the course of the life of an investment can work out at some considerable costs.
Since transparency has been introduced to the industry fund supermarkets are being forced to offer increasingly more attractive deals with the major players having to offer reduced invest-ment charges on scores of funds.
Knowledge in the investment world is always empowering and the customer has made the in-dustry have to work a lot harder.
At present it is estimated that nearly £150 billion is tied up in UK investment funds, so the over-all savings to the ordinary investor are going to be enormous.
The new generation of low cost funds that are coming on to the market offer the prospect of cheaper investment in the foreseeable future, which, in these still austere times is welcome news.
The laws surrounding financial advice and selling prohibit me here from making any kinds of suggestions or even discussing the benefits and features of individual products, I am a financial blogger, not an advisor.
That said, the only real suggestion I can give is to take some independent financial advice be-fore you invest, the cost of an advisor’s time will be far less in the short run than the price of an over priced fund (they are still out there, by the way, waiting to ensnare the unwary investor).
With more transparency comes more data so the range of options open to someone looking to buy into a fund can be quite dizzying; this is why it pays to get professional advice in order to take advantage of changes that have been set up to benefit you.