What are the types of Fund of Funds?
- Asked By
- Updated On:19-Oct-2021
- Replies:1
Short Answer
Similar to traditional Mutual Funds, Fund of Funds are professionally managed funds that are available in multiple types. Some of the types of FoFs are Gold FoFs, ETF FoFs, International FoFs, Multi-Manager FoFs, and Asset allocation FoFs.
Detailed Answer
What is Fund of Funds?
A Fund of Funds is similar to Mutual Funds where a fund manager decides to invest the pool of money on your behalf. These funds tend to invest in other mutual funds or other investment instruments to get an overall diversified portfolio. The fund manager of a Fund of Fund enjoys the liberty to choose the asset and the funds for investment.
There are various types of Fund of Fund consisting of various types of assets. Let’s look at some of them.
Different types of Fund of Funds
1. Multi-Manager FoFs
This is the most common type of Fund of Funds. Under this category, a fund manager invests in other mutual funds that are managed by individual fund managers. Because of the fact that this type of fund involves more than one fund manager, it is known as a multi-manager Fund of Funds.
2. Asset allocation FoFs
These types of funds invest in diverse types of assets like equities, debt, commodities (gold, silver), etc. As asset-allocated funds are exposed to equity and debt, it generates higher returns with reduced risks. The diversification among these asset classes provides a lower risk and reduced volatility.
3. Gold FoFs
If you want to invest in precious metals, especially Gold, a Gold Fund of Fund remains an excellent option. Gold FoFs have the underlying asset like Gold. But it invests in gold in various forms like gold mutual funds, physical gold, and also gold mining companies. This way you can receive diversified exposure to gold and on top, get the same returns as gold.
4. International FoFs
International Fund of Funds invests in abroad markets and international equities and bonds. Any investor, who is willing to invest in abroad markets can definitely consider investing in international funds. International funds additionally provide geographical diversification and offer higher returns.
5. ETF (Exchange Traded Funds) FoFs
Exchange-Traded Funds are a popular choice among retail investors, and ETF FoFs are equally popular. The reason being, to purchase an ETF, you require a Demat account. Whereas you can easily purchase an ETF FoF that contains the underlying as the ETF without a Demat account. Due to this ETF FoF are exceptionally popular. You can also invest in abroad ETF through this route.
These were the five types of Fund of Funds that are prevalent in India. FoFs are an ideal choice for investors who are looking to get a well-diversified and professionally managed portfolio at a reasonable price. You can invest in abroad markets, ETFs, precious metals, or a mixture of these under a Fund of Funds.
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (0)
Angel Broking and Paytm Money both these platforms are popular among traders. But if you are a beginner or if you want to switch to a new trading platform and you are considering choosing one of these two, and then you came to the right place.
ETF is an investment instrument that tracks a group of securities from a particular asset class and performs according to it. It is managed by a Fund manager who makes sure that the ETF tracks the underlying asset accurately. ETFs are listed on the Stock Exchanges therefore one can buy & sell them within the market hours at their desired prices.
You need to download the account closure form available at Demat Account Closure Form and submit it at your nearest YSL branch. For the detailed process, read further.
Commodities are a separate segment that you have to get activated in Zerodha in order to trade in them. Once you submit some basic documents such as your income proof or salary slip, it will get activated. After that, you can buy or sell any commodity on Zerodha.
Zerodha is an Indian discount stock broker which provides various services to its customers. Zerodha is a paid platform with Rs 200 as account opening charges and their brokerage rates are different for each segment which are discussed in detail.
There are multiple avenues through which a 15% p.a. return on investment can be made. These are through equity, mutual funds, fixed deposits, government bonds, and schemes, etc.
As online trading is getting popular every day, it is becoming even more important to choose the right trading platform. Choosing the best trading platform can give you more flexibility to trade in the various trading market.
Yes, now you can easily invest in stocks through the Groww App. It is a popular discount stock broker firm in India who recently expanded its services to the the stock broking arena. It allows traders to invest online without any subscription fees, transaction charges or any other charges.
Equity and Commodity are the terms which we hear in everyday lives. These terms are used which helps in explaining trades and investments in the share market by investing funds done by buying or selling.
We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.