What is fund of funds in India?
A 'Fund Of Funds' (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. An FOF Scheme of a primarily invests in the units of another Mutual Fund scheme. This type of investing is often referred to as multi-manager investment.
Fund of funds examples
One of the most common examples of a fund of funds is a target date mutual fund. Target date funds allocate investors' capital based on their expected retirement date. For example, Vanguard's target date mutual funds pool investors' money and invest it into four other Vanguard funds.
A Fund of Funds (FOF) is an investment vehicle where a fund invests in a portfolio composed of shares of other funds rather than investing directly in stocks, bonds, or other securities.
The Fund of Funds is a good bet for small investors who do not wish to take higher risk. The diversification of funds helps to reduce the risk. This is also a great medium of investment for an investor with small amounts of funds available for investment each month.
The biggest advantage of Fund of Funds is that it gives access to different mutual funds having varied investment objectives through a single investment. For example, the ICICI Prudential Asset Allocator fund invests in around 20 different equity and debt schemes of the ICICI Prudential mutual fund.
1. Diversification. Fund of funds target various Best Performing Mutual Funds in the market, each specialising in a particular asset or sector of fund. This ensures gains through diversification, as both returns and risks are optimised due to underlying portfolio variety.
A fund of funds (FOF) is an investment product made up of various mutual funds—basically, a mutual fund for mutual funds. They are often used by investors who have smaller investable assets, limited ability to diversify or who are not that experienced in choosing mutual funds.
| Fund Name | Returns Since Inception | Expense Ratio |
|---|---|---|
| Mirae Asset Equity Allocator Fund of Fund | 24.3% | 0.21% |
| Edelweiss US Technology Equity Fund of Fund | 11.60% | 2.37% |
| Axis Global Equity Alpha Fund of Fund | 8.30% | 1.63% |
| Axis Global Innovation Fund of Fund | -14.7% | 1.59% |
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
The Fund of Funds provides equity funding for MSMEs, which have growth potential and viability. This scheme is expected to facilitate equity financing of Rs. 50,000 crore in the MSME Sector. Venture Capitals (VCs) and Private Equity (PE) firms offer early-stage funding, but very few provide growth-stage funding.
How does fund of fund work?
A fund of funds is an investment vehicle that invests in mutual funds, exchange-traded funds (ETFs) or even hedge funds. When you invest in a fund of funds, you get an entire diversified investment portfolio at once, featuring broad exposure to many different asset classes with less risk involved.
A fund of funds (FOF) is a pooled fund that invests in other funds. FOFs usually invests in other hedge funds or mutual funds. The fund of funds strategy aims to achieve broad diversification and minimal risk. Funds of funds tend to have higher expense ratios than regular mutual funds.
These mutual funds can be used to invest in both in domestic as well as international funds, as per the discretion of the asset management company.
FoF are taxed just like any other debt mutual fund scheme, even though the fund invests in equity mutual fund schemes. If you withdraw before 3 years of investment, Short Term Capital Gains are added to the taxable income and taxed as per the income tax slab of the investor.
Fund of Funds is a multi-manager investment fund that helps the startups by reducing the risk of investing in bonds, stocks and other types of securities. The fund of funds can be domestic or international.
A feeder fund is a type of investment fund that does the majority of its investments through a master fund, using a master feeder relationship. It is similar to a strategy called fund of funds, but the main difference is that the master fund does all the investing.
1) Axis Bluechip Fund Direct-Growth
Axis Bluechip Fund Direct Plan-Growth is an Equity Mutual Fund Scheme launched by Axis Mutual Fund and is the Highest Return Mutual Fund in Last 5 Years.
| Fund Manager Names | Fund Name | AUM |
|---|---|---|
| R. Srinivasan | SBI Mutual Fund | ₹1,14,343 Cr |
| Sankaran Naren | ICICI Prudential Mutual Fund | ₹1,23,053 Cr |
| Jinesh Gopani | Equities - Axis Mutual Fund | ₹54,466 Cr |
| Sohini Andani | SBI Mutual Fund | ₹36,724 Cr |
- Canara Robeco Small Cap Fund Direct Growth. ...
- SBI Small Cap Fund Direct Plan Growth. ...
- Quant Mid Cap Fund Growth Option Direct Plan. ...
- Nippon India Small Cap Fund - Direct Plan - Growth Plan. ...
- Edelweiss Small Cap Fund Direct Growth. ...
- PGIM India Midcap Opportunities Fund Direct Growth.
Generally, FOF managers charge a 0.5% to 1.0% annual management fee, with some taking a minor portion of the carried interest (“carry”) in the 5.0% to 10.0% range. The FOF fees are placed on top of the fees charged by the underlying active fund managers that typically charge fees in the following ranges.
Do fund of funds have carried interest?
What Are the Downsides? That said, there are some serious downsides to the private equity fund of funds model. The most serious one is the double fees. In addition to the management fee and carried interest charged by the PE firms (traditionally 2% and 20%), a PE fund of funds also charges management fees and carry.
What is a Pension Fund? A pension fund is a pool of funds that have been contributed by employers and their employees, and which is being invested to provide employees with retirement benefits.
| Fund Name | 3-year Return (%)* | |
|---|---|---|
| PGIM India Flexi Cap Fund Direct-Growth | 28.40% | Invest |
| SBI Focused Equity Fund Direct Plan-Growth | 20.74% | Invest |
| UTI Flexi Cap Fund Direct-Growth | 22.89% | Invest |
| Edelweiss Large & Mid Cap Direct Plan-Growth | 23.34% | Invest |
| Scheme Name | Plan | Crisil Rank |
|---|---|---|
| SBI Contra Fund - Direct Plan - Growth | Direct Plan | 5 |
| ELSS | ||
| IDFC Tax Advantage (ELSS) Fund - Direct Plan - Growth | Direct Plan | 5 |
| PGIM India ELSS Tax Saver Fund - Direct Plan - Growth | Direct Plan | 5 |
Jain, who was chief investment officer (CIO) at HDFC AMC, stepped down on Friday after serving 19 years at the fund house. He handled three flagship schemes of HDFC AMC which had combined assets under management of nearly Rs 90,000 crore as of June 2022.
What is a Private Equity Fund of Funds? A private equity fund of funds acts as a Limited Partner for private equity firms. It raises capital from institutional investors such as pensions, sovereign wealth funds, endowments, and high-net-worth individuals, and it invests that capital in specific PE firms.
A fund of funds (FOF) is a pooled fund that invests in other funds. FOFs usually invests in other hedge funds or mutual funds. The fund of funds strategy aims to achieve broad diversification and minimal risk. Funds of funds tend to have higher expense ratios than regular mutual funds.
Fund of Funds is a multi-manager investment fund that helps the startups by reducing the risk of investing in bonds, stocks and other types of securities. The fund of funds can be domestic or international.
A feeder fund is a type of investment fund that does the majority of its investments through a master fund, using a master feeder relationship. It is similar to a strategy called fund of funds, but the main difference is that the master fund does all the investing.
