ETF / FOF

Fund of Funds (FOF)

Mutual funds that do not invest in financial or physical assets, but invest in other mutual fund schemes, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. 

There are different types of ‘fund of funds’, each investing in a different type of collective investment scheme. 

Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks.