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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.
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. This strategy aims to provide exposure to a diverse variety of asset classes, which could include stocks and bonds as well as gold and other commodities.
The Utah Fund of Funds is a $300 million State of Utah economic development program aimed at providing access of alternative or non-traditional capital to Utah entrepreneurs.
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.
A FOF aims at diversifying the risk of a single fund by investing in several types of funds. An investor with limited capital can invest in one FOF and get a diversified portfolio consisting of, for example, bonds, gold, equity, and debt. Such a portfolio combination is rarely found in the average mutual fund.