How does fund of funds work?
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How does fund of funds work?
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.
What is fund of funds scheme?
A ‘Fund Of Funds’ (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. An FOF Scheme of a primarily invests in the units of another Mutual Fund scheme.
What is the purpose of a fund?
A fund is a pool of money that is allocated for a specific purpose. A fund can be established for many different purposes: a city government setting aside money to build a new civic center, a college setting aside money to award a scholarship, or an insurance company that setts aside money to pay its customers’ claims.
Why do you need to evaluate mutual funds?
Fund evaluation also helps you to compare the performance of your investment against other similar funds. Additionally, a change in fund manager or fundamental attributes of your fund may also trigger an evaluation. Hence, a review and rebalancing might be required to keep the risk profile of the portfolio intact.
Are fund of funds safe?
A fund of funds is undoubtedly a safe choice to make when it comes to investing your hard-earned money. The diversification of your investment across several funds from various sectors along with thorough professional management by expert fund managers ensures minimum risk on your investment.
What is fund of funds with example?
For example, Quantum Equity FoF invests in Invesco India Growth Opportunities Fund, Kotak Standard Multicap Fund, Mirae Asset Large Cap Fund, ICICI Bluechip Fund, L Midcap Fund, Axis Bluechip Fund, and Franklin India Prima Fund. Two, FoFs are treated as non-equity schemes for taxation.