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Fund of Funds

Also called: FOF, multimanager investment

Dec 23, 2022

What is a fund of funds?

A fund of funds is a fund that invests in other funds rather than individual securities.

Funds of funds invest in mutual funds, exchange-traded funds, and hedge funds.
Funds of funds may charge a management fee in addition to the fees charged by the underlying investments.

A fund of funds invests in other mutual funds, exchange-traded funds, and more-exclusive investment vehicles such as hedge funds or private equity funds. They are generally found in asset allocation Morningstar Categories, particularly target-date fund categories.

Investing in a fund of funds may be more expensive than investing in a standard mutual fund, as they may charge management fees in addition to the fees on the underlying investment. However, because of their management and diversification, funds of funds allow investors to take a more hands-off approach to investing.

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