Funds of Funds (FoF): Meaning & How it Works?
Funds of Funds(FoF) is a type of mutual fund that utilizes pooled resources of investors to put money in different mutual funds available in the market. Alternatively, investments in AIFs can also be done via these mutual funds.
Additionally, the degree of risk in portfolios of FoF varies according to the main objective of the fund manager. For instance, if the manager's main goal is to earn the highest possible returns, mutual funds with higher net asset value will be targeted, even though it can cause much risk. But, if the main aim is stability, low-risk instruments will be targeted.
Furthermore, the main characteristic of these funds is that they are managed by highly skilled and experienced professionals, ensuring accuracy in market prediction to a certain extent and reducing the ri...
