Fund of Funds

Fund of Funds refers to an investment strategy that involves Investing in a portfolio of other investment funds rather than directly in Stocks, Bonds, or other Securities. This structure allows investors to achieve diversification across various Asset Classes and fund managers.

For example, a hedge fund that allocates Capital to multiple other hedge funds to spread risk and enhance Returns is considered a Fund of Funds. Similarly, a mutual fund that invests in a mix of Equity, Fixed Income, and real estate funds is also a Fund of Funds.

Cases:

• Example 1: A Equity/">Private Equity Fund of Funds may invest in several different Equity/">Private Equity funds that focus on various sectors like technology, healthcare, and consumer goods, thus diversifying its exposure.
• Example 2: An investor might choose a Fund of Funds that targets socially responsible investments by selecting funds that adhere to environmental, social, and governance (ESG) criteria.