Fund of funds

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Fund of funds

A mutual fund or hedge fund that invests in other funds.

Fund of Funds

A mutual fund that invests exclusively in other mutual funds. Theoretically, funds of funds allow the investor to diversify risk even more than in a regular mutual fund without reducing return significantly. One disadvantage is the fact that most funds of funds have higher fees because shareholders have to pay fees for the funds of funds themselves and must also pay fees for the underlying funds. Funds of funds were especially popular in the 1960s.

fund of funds

An open-end investment company that invests only in the shares of other open-end investment companies. This type of mutual fund was popular during the 1960s but subsequently fell into disfavor with investors. Many analysts consider it more of a gimmick than a useful investment vehicle.

Fund of funds (FOF).

A fund of funds is a pooled investment, such as a mutual fund or a hedge fund, whose underlying investments are other funds rather than individual securities.

Despite some major differences, what all funds of funds have in common is an emphasis on diversification for its potential to reduce risk without significantly reducing return.

They're also designed to simplify the investment process by offering one-stop shopping.

Many mutual fund FOFs are asset allocation funds and typically include both stock and bond funds in a particular combination that the FOF manager has chosen to meet a specific objective. A mutual fund FOF may select all its funds from a single fund family or it may choose funds offered by different investment companies.

A hedge fund FOF, which owns stakes in other hedge funds, allows investors to commit substantially less money to gain exposure to this investment category than it would cost to invest in even one fund.

A major drawback with all funds of funds is that the fees tend to be higher than you would pay owning the underlying funds directly.

References in periodicals archive ?
JS Islamic Hybrid Fund of Funds - MUFEED###September 02, 2019###70.81###68.48###68.48
NIIFs Fund of Funds will anchor and/or invest in funds managed by fund managers who have good track records in infrastructure and associated sectors in India.
By creating the Fund of Funds, the Bulgarian government plans to replace the European Investment Fund, a structure of the European Investment Bank (EIB), which currently is managing about BGN 500 M (EUR 250 M) under the EUas JEREMIE initiative, commented in its coverage of the news.
Rothschild, which bought last year fund of funds specialist HDF Finance, aims to boost its fund of funds operations to some USD10bn (EUR7.6bn) to gain scale in a quite concentrated business area.
The fund of funds, to be called AllianceBernstein Equity 3D, will be part of Luxemburg-based Sicav BG Selection.
The authors attribute lower returns to the cost of necessary due diligence, which is expensive and increases with the number of underlying hedge funds in a fund of funds.
MAXAM CAPITAL MANAGEMENT: The fund of funds has lost about $280m on funds invested with Madoff, according to a Wall Street Journal report.
JS Islamic Hybrid Fund of Funds - MUFEED###August 30, 2019###70.49###68.17###68.17
The fund of funds is designed to achieve an attractive return for investors, appeal to major venture capital firms to offer their expertise and risk capital to the region, and create a pathway for innovation and information to flow among corporations, startups and innovators.
Rothschild is also eyeing takeovers of US equity portfolio managers to potentially double its presence in the country, where it manages USD4bn in large and small cap stock funds, the CEO told the agency.Country: USASector: Banking/Financial ServicesTarget: unnamed fund of funds business, unnamed equity portfolio managersBuyer: Rothschild & Cie Gestion Type: Corporate acquisitionStatus: BiddingBuyer advisor: Cambridge International Partners Inc
France-based asset management firm, Oddo Asset Management, has announced a plan to launch a new fund of funds.
Following the closing of the Sal Oppenheim Group acquisition, Deutsche Bank is establishing a new private equity fund of funds business within its Asset Management division.

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