Home > Glossary > Fund Of Funds (FOF)

Meaning / Definition of

Fund Of Funds (FOF)

Categories: Finance,

A fund of funds is a pooled investment, such as a mutual fund or a hedge fund, whose underlying investments are other funds rather than individual securities. Despite some major differences, what all funds of funds have in common is an emphasis on diversification for its potential to reduce risk without significantly reducing return. They're also designed to simplify the investment process by offering one-stop shopping.Many mutual fund FOFs are asset allocation funds and typically include both stock and bond funds in a particular combination that the FOF manager has chosen to meet a specific objective. A mutual fund FOF may select all of its funds from a single fund family or it may choose funds offered by different investment companies.A hedge fund FOF, which owns stakes in other hedge funds, allows investors to commit substantially less money to gain exposure to this investment category than it would cost to invest in even one fund.A major drawback with all funds of funds is that the fees tend to be higher than you would pay owning the underlying funds directly.

Featured term of the day

Definition / Meaning of

No-load Mutual Fund

Categories: Finance,

You buy a no-load mutual fund directly from the investment company that sponsors the fund. You pay no sales charge, or load, on the fund when you buy or sell shares.Although, no-load funds may charge a redemption fee if you sell before a certain time has elapsed in order to limit short-term turnover. Some fund companies charge an annual fee, called a 12b-1 fee, to offset their marketing costs. Your share of this fee is a percentage of the value of your holdings in the fund.You may also be able to buy no-load funds through a mutual fund network, sometimes known as a mutual fund supermarket, typically sponsored by a discount brokerage firm. If you have an account with the firm, you can choose among no-load funds sponsored by a number of different investment companies.load funds and no-load funds making similar investments tend to produce almost equivalent total returns over the long term - say ten years or more. But it can take an investor nearly that long to offset the higher cost of buying load funds.

Most popular terms

1. Audit Committee
2. Internalization
3. SIMPLE
4. Flexible Spending Account
5. Fiduciary
6. Likelihood Of Confusion
7. 529 College Savings Plan
8. Unit Investment Trust (UIT)
9. Building Ordinance Coverage
10. Savings Bonds

Search a term

Keyword:

Browse by alphabet

ABCDEFG
HIJKLMN
OPQRSTU
VWXYZ#

Browse by category

Accounting
Banking
Bankruptcy Assistance
Bonds and Treasuries
Brokerages
Business and Management
Compliance and Governance
Credit and Debt
E-commerce
Economics
Estate Planning
Forex
Fraud
Fundamental Analysis
Futures
Global
Insurance
International Trade
Investing and Trading
Ipos
Legal
Loan and Mortgage
Mergers and Acquisitions
Mutual Funds
Operation and Production
Options
Patent
Personnel Management
Real Estate
Retirement and Pension
Statistics and Risk Management
Stocks
Strategies
Tax
Technical Analysis
Venture Capital