Sub-funds stand as a smaller fund that when grouped together with other similar sized funds form what is referred to as an umbrella fund. Handling of each sub-fund typically remains distinct while the composition of an individual sub-fund is unique, comprising of stocks, commodities, bonds, or a combination.
Investors in a sub-fund retain the option of quickly and easily switching funds to another grouping in the same umbrella fund family. With a traditional mutual fund, the shares must be sold and others purchased with the additional cost of transaction fees and time. In a sub-fund, the process is much more fluid and rarely involves cost. This allows investors to change priorities without penalty.