An FoF scheme that falls under this category will invest in a diverse set of mutual funds from the world of equity, debt, or hybrid assets.
3. Gold Fund Of Funds
Gold FoF schemes invest in mutual funds that primarily invest in gold.
4. Multi-Manager Fund Of Funds
Picture this - one fund with different components each managed by its very own fund manager. That’s known as a multi-manager FoF scheme.
5. ETF Of ETFs
Exchange Traded Funds (ETFs) can invest in other ETFs as well.
Pros And Cons Of Investing In Fund Of Fund Schemes
Pros Of FoF Schemes
Cons Of FoF Schemes
High expense ratio
Potentially low risk
Relatively high returns
Fund of funds schemes are taxed like debt funds regardless of whether they’re invested in equity or hybrid mutual funds.
Who Should Invest In Fund Of Fund Schemes?
Fund of funds schemes are generally known to be low-risk investments that can generate reasonable returns over the long term. That said, FoF schemes have a higher expense ratio than most mutual funds.
Thus, FoF schemes are suitable for investors across risk profiles, This is down to benefits like diversification and professional management.
But it’s important to choose the right FoF schemes that are reliable and efficient. You can access the best fund of fund schemes on Cube that are handpicked by Cube’s mutual fund advisor, Wealth First.
Watch this video to know more about Wealth First
Fund of funds schemes invest in other mutual funds instead of following the traditional approach of buying stocks and bonds. They can invest in domestic or international mutual funds.
FoF schemes are typically defined by top-notch diversification, solid long term returns, and relatively low volatility. However, they carry a high expense ratio because of the multiple mutual funds they invest in.
Curious about personal finance and all things money. Can either find me reading a book or dancing to a tune.
Top 5 Reasons To Try Our Powerful Investment App!
Schedule a call based on your convenience. And get an expert to help you invest.
on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!