What is a fund of funds (FOF)?

Fund of funds means a type of mutual fund that invests in other mutual funds. So, instead of directly investing in stocks or other instruments, the fund manager invests in a portfolio of various mutual funds. How Does FoF Work? Mutual funds invest in different securities, like equity and debt instruments.

What types of funds do FOFs invest in?

These types of FoF invest in other funds to diversify their portfolio across various asset classes. For example, FoFs could invest in one mutual fund scheme that invests in stocks, one debt fund scheme that invests in bonds, and one gold fund scheme.

What is an ETF FOF?

ETF FOFs invest in Exchange Traded Fund (ETFs), a basket of investment instruments replicating a broader market index such as NIFTY 50 or BSE SENSEX. The movement of a benchmark index helps us understand the overall market sentiment and is considered a key barometer to the overall market sentiment.