Fund of funds

(redirected from Umbrella fund)
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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 ?
The funds are sub-funds of the Ireland-domiciled umbrella fund, BlackRock Institutional Cash Series plc.
The fund will be established by AZ Fund Management, Azimut Luxembourg fund management company within its UCITS umbrella fund.
The Kingdom will establish the new 'National Development Fund' which will serve as an umbrella fund for existing social, industrial and agricultural funds.
A feeder fund is one that puts all of its investment capital into a bigger umbrella fund or 'master fund' that handles all portfolio investments and trading.
Under the New Fund Regulations, a feeder fund is a public investment fund or part of a group of funds for an umbrella fund which invests at least 85% of its assets in the units of a public master fund or foreign public fund and is excluded from investing in negotiable securities and certain other investments determined by SCA.
Their appeal, named the Umbrella Fund, was launched by Jonathan Gibbs, Bishop of Huddersfield.
With the acquisition, the umbrella fund will serve as a platform to introduce other Islamic funds with strategies, already employed by QInvest Asset Management in its international funds and contribute to the growth of the Islamic finance market in Turkey.
The Central Bank of Ireland has authorized John Hancock Worldwide Investors, PLC as an open-ended investment company with variable capital constituted as an umbrella fund with segregated liability between its subfunds under the laws of Ireland.
Goranov also said that letters had been sent to the European Investment Bank (EIB), the World Bank and the EBRD, inviting them to provide technical assistance in the establishment of the umbrella fund as well as to participate in steering committee.
NFD currently has 82m Euro under management within its umbrella fund.
South Africa's Absa has launched an umbrella fund aimed at making retirement saving affordable and halting the decline in saving in South Africa.
Yapi Kredi has developed a wider and more sophisticated product range, including a new Luxembourg SICAV umbrella fund, incorporated in February 2013, to help it reach a broader group of investors.