How to buy into a fund

If you wish to buy into a fund, then there may be several different ways in which you can do this, depending on the circumstances.

Typically you will often buy as a private individual through a third party, called an intermediary, and this could often be a financial adviser, someone at your bank and so on, though there may be times where you deal directly with whoever manages the fund.

There are different types of funds and it is important to understand what these are when it comes to buying and selling - these are called single priced funds and dual priced funds respectively.

As the name implies, with single priced funds the price at which you buy and sell is a single price, ie the same, and that implies that with a dual priced fund that is not the case - and indeed it isn't, as with those you buy at the offer price and sell at the bid price for the respective fund.

Remember when you buy into the fund that almost certainly there will be ongoing management fees to pay. These are typically taken on an annual basis and it is important to know in advance what these are. Generally if the fund has very little active involvement other than a watching brief from the management company, then the rate may be around the 0.5% mark. For really active funds that are, for instance aggressive growth funds and therefore have a lot of trades and monitoring from the fund manager, then that could rise up to anything around the 2% mark.

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