The Basics of an Umbrella Fund

The umbrella fund is a type of investment fund comprised of several smaller funds. This is similar to a family of funds arrangement. One single mutual fund company is in charge of the umbrella fund and also runs all of the sub-funds that it is made of.

Each smaller fund is treated as if it were its own mutual fund. Typically, each sub-fund will also have its own unique investment strategy. Some sub-funds will be based on investing in stocks, while others might be based on investing in bonds or commodities. 

One of the big advantages of investing in an umbrella fund is that you can typically switch from one sub-fund to another easily. In most cases, if you want to switch mutual funds, you have to sell your shares of one fund and then purchase shares of the other. This means that you have to deal with transaction costs and the hassle of switching providers. When you work with an umbrella fund, this will not be an issue, and there should not be any transaction costs involved. You can change the investment strategy that you use without losing any money on the deal.