You can earn even more by investing in the mutual fund's fund of funds category.

 You can earn even more by investing in the mutual fund's fund of funds category.

Risk can be mitigated by funds of funds

This type of scheme invests money in other mutual fund schemes

If you are considering investing in a mutual fund but are afraid of the risks involved, you can reduce the risk by diversifying your portfolio. Risk can also be reduced through funds of funds. This is just one category of mutual funds. This type of scheme invests money in other mutual fund schemes. Investors who want to diversify their portfolio to reduce risk can invest in it. Today we are going to tell you about this category of Mutual Funds.

What is a 'Fund of Funds'?

A fund of funds is a mutual fund scheme that invests in another scheme. But it is not limited to index funds and exchange traded funds (ETFs). By investing in this scheme, the fund of funds can often give an investor a broad exposure to multiple market segments or strategies and there is also the possibility of getting a better return.

Understand by example

If the fund manager wants to invest in gold, the fund manager can invest in any scheme by investing money in a gold scheme that invests in gold. This means that the Fund of Funds Mutual Fund is a scheme that invests in another scheme. They are not bound to invest money in any one scheme. Funds of funds do not contain shares or bonds of the company, funds of funds hold units of other schemes. A fund of funds can invest in several schemes of its fund house or other fund houses.

Are there many types of 'funds of funds'?

Funds of funds can be of three types. One who invests in equities. Others who invest money in debt funds. The third investment is in the international market. These three types cover almost all asset classes.

For whom is this scheme beneficial?

Those who want to diversify their portfolio while investing less money in mutual funds would be worth investing in it. It will also be suitable for people who do not know much about mutual funds, as a world class fund manager handles your money. It also lowers your risk.

Read Report

This 'Fund of Funds' gave a good return

Name of the Fund 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 Savings 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