Do-it-yourselfers who hate paperwork but want a lot of choices shouldn't despair: No-transaction fee networks, also known as "supermarkets," are a popular solution. If you invest through a major supermarket, you can choose from thousands of funds offered by dozens of fund families—and there's no direct cost to you. So you could buy one fund from, say, Jensen, another from Royce, yet another from PIMCO, and one from Tweedy, Browne and receive all of your information about performance, taxes, etc., on one consolidated statement.
There are a number of fund supermarkets today, and more and more fund families are getting into the act with supermarkets that include funds outside of their own families.
What could the drawbacks here possibly be? Surprisingly, one drawback is cost. While it is true that fund supermarkets do not charge you when you invest in a fund through their programs, they charge the fund companies to be included in their programs. That charge ranges from 0.25% to 0.40% of assets per year. As any student of economics knows, that fee acts a whole lot like a tax and it's passed right along to shareholders—that's right, to you—as part of a fund's expense ratio, the fee the fund charges you each year for managing your money. The real kicker is that shareholders are paying these fees whether they buy the funds through the fund supermarket or directly from the fund family.
Some observers, including Vanguard founder Jack Bogle, also suggest that fund supermarkets encourage rapid trading among funds. Most supermarkets offer online trading, and with so many funds from so many families investing in so many different things to choose from, the temptation is great. But trading too much can hurt your portfolio's overall performance. (We'll tackle that subject in depth in a later lesson.)