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Investment
Fund of Funds
A fund that invests in a portfolio of other funds rather than individual securities. This structure provides diversification but may have higher fees due to multiple layers of management.
FoFs aim to reduce risk through diversification across managers, styles, or asset classes. Investors gain professional oversight but may pay additional fees. Careful selection of underlying funds is critical to performance.
Fund of funds is like a curated music playlist — blending many songs (funds) into a single, diversified experience.
Real world: A FoF investing in multiple hedge funds or mutual funds gives investors access to a mix of strategies in one product.
💡 Fund of funds offer diversified exposure to multiple funds, balancing risk and convenience for investors.