Fund of funds

(redirected from Umbrella funds)

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 ?
Plus, the Army would be rendered as less productive in time , if all the wars fought were dissolved and peace actually endured, leaving no justification for the Armed forces to justify the huge umbrella funds earmarked for them every year.
Luxembourg) and Omega Trust Umbrella Funds (registered in Ireland).
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SEI has been extremely pleased with the existing fund and plans to launch two additional umbrella funds in July which will be distributed into the UK, Europe and Japan.
Its typical response is to impose more and more onerous requirements on funds and the industry, accelerating a move away from free standing funds into umbrella funds, where they will once again be under the total control of the product provider.
HCI was founded in 1985 and offers the following closed-end funds: ship funds, real estate funds, private equity umbrella funds, real estate project development funds, accumulation of capital funds as well as secondary life insurance funds.
These service providers are often financial institutions that provide more than one service to a fund, or to a participating employer belonging to so-called umbrella funds.
Parvest, BNP Paribas Asset Management's flagship fund, is one of the leading Luxembourg-domiciled umbrella funds and is registered for sale in 25 countries.
In addition, it also administers equity funds including fixed-income, money market, guarantee, capital protection and umbrella funds with a total investment value of more than 20 billion Euros.