Mutual Fund Investment: How right to invest money in Fund of Funds
Mutual Fund Investment: The attraction of investors towards mutual funds is increasing. Now let’s assume that you have invested money in a mutual fund scheme and the fund manager instead of buying shares or debt securities of any company with that money invests that money in another mutual fund scheme. In this case, your money is invested in the Fund of Funds (FoF) scheme and this is an investment option for investors in addition to regular funds.
The fund manager of the fund of funds buys units of any other mutual fund scheme with your money. It can be of many types like Gold Fund of Funds, FOF Investing in International ETFs, Multi Manager FOF of Multi-Asset FOF. However, now the question arises whether it is right to invest money in Fund of Funds and in this. Under what circumstances should one invest? Here, Scripbox’s Chief Investment Officer Anoop Bansal has given information about those situations when money should be invested in FoF and when not.
Under these circumstances it is right to invest money in FoF.
If an investor has a passive outlook on the investment portfolio, he/she can opt for Fund of Funds at the asset allocation or/and product level in his/her portfolio.
FOF of ETFs based on a country or commodity may prove to be a better investment option than ETFs as the purchase price will be the NAV which will be closer to the benchmark value at the end of the trading day.
If you want to invest in a high-net-worth product and less liquid product and where there is a high investment limit for investment, it is better to invest in Fund of Funds.
Under these circumstances it is right to invest money in FoF.
If an investor has a passive outlook on the investment portfolio, he/she can opt for Fund of Funds at the asset allocation or/and product level in his/her portfolio.
FOF of ETFs based on a country or commodity may prove to be a better investment option than ETFs as the purchase price will be the NAV which will be closer to the benchmark value at the end of the trading day.
If you want to invest in a high-net-worth product and less liquid product and where there is a high investment limit for investment, it is better to invest in Fund of Funds.