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What’s FOF?

A Fund of Fund (FoF) is a mutual fund scheme that allows to invests in other mutual fund schemes. In this scheme, the fund manager holds a portfolio of other mutual funds rather than directly investing in equity or bonds. An FoF may invest in one or more schemes of the same fund house or another fund house according to the choice.
It has portfolios of varying degree of risks, which depends on the main aim of the manager. If the primary target of the portfolio manager is to earn the highest yields possible, then mutual funds having a higher Net asset value will be targeted, even though it is associated with a higher degree of risk but, if the primary aim is stability then low-risk instruments will be acquired using the pool of financial resources obtained.
One of the essential characteristics of FoF’s that they are maintained by highly trained professional portfolio managers. This helps to ensure accurate market predictions to a certain extent, minimizing the chances of incurring a loss.

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