Those who want to diversify their portfolio with less money invested in mutual funds, it would be right for them to invest in it
Risk can be reduced through the Fund of Funds. Such schemes invest money in other mutual fund schemes.
If you are planning to invest in a mutual fund but are afraid of the risk involved in it, then you can reduce the risk by diversifying the portfolio. Risk can also be reduced through the Fund of Funds. It is a category of mutual funds. Such schemes invest money in other mutual fund schemes. Investors who want to diversify their portfolios to reduce risk can invest in them. Today we are telling you about this category of mutual funds.
What are ‘Funds of Funds’?
Funds of funds are schemes of mutual funds that invest in other schemes. But this is not limited to index funds and exchange traded funds (ETFs). By investing in multiple schemes, the Fund of Fund can give an investor a broad exposure to multiple market segments or strategies and is also likely to yield better returns.
Understand by example
If the fund manager wants to invest in gold, he will invest in the gold scheme investing in gold. This means that the Fund of Funds are schemes of mutual funds that invest in other schemes. Funds of funds do not have shares or bonds of the company. Instead, fund of funds hold units of other schemes. A fund of funds can invest in several schemes of its fund house or another fund house.
There are many types of ‘Fund of Funds’?
Funds of funds can be of three types. One who invests in equity. Others who invest in debt funds. Third, those who invest in international markets. These three types cover almost all asset classes.
For whom is this scheme beneficial?
Those who want to diversify their portfolio with less money invested in mutual funds, it would be right for them to invest in it. Apart from this, it is also true for those who do not know much about mutual funds, because a world-class fund manager handles your money in it. This also reduces your risk.
These ‘Funds of Funds’ gave good returns
|Fund Name||How much return (%) in 1 year||How much return (%) in 3 years||How much return in 5 years (%)|
|DSP US Flexible Equity||17.15||13.82||12.40|
|Quantum Equity FoF||15.67||9.04||8.36|
|Nippon India Gold Saving||23.02||11.10||8.13|
|Franklin India Life Stage FoF||7.64||6.81||7.60|
|IDFC Asset Allocation FoF||11.92||7.52||7.49|