Fund of Funds (FoF) is a mutual fund scheme that invests in other schemes of mutual funds. Similar to how funds invest in stocks and bonds, the Fund of Funds invests in other mutual fund schemes. So, depending on your investment objective, this mutual fund scheme may invest in debt and equity.
A Fund of Fund is a mutual fund scheme that invests in other mutual fund schemes. In this, the fund manager holds a portfolio of other mutual funds instead of directly investing in equities or bonds. A given FoF may invest in a scheme of the same fund house or another fund house. The portfolio is designed to suit investors across risk profiles and financial goals. The investors get an opportunity to benefit from the diversification as a result of investing in numerous fund categories.
The FoF can be domestic as well as overseas. In the case of foreign FoF, the fund manager invests in units of offshore mutual fund schemes. He/she ensures that the target fund’s investment philosophy and risk profile matches with that of the fund’s mandate. The main objective is to create wealth over the long run.
