| Mutual fund investments come in various sub | | | | of investment experience a wide range of |
| categories that require keen attention to details, | | | | diversity. Increase in diversity translates to |
| lest an investor finds himself investing in the | | | | relatively low risk as well as high rates of returns |
| wrong type. A fund of funds investment is a bit | | | | from the various securities. A manager of the |
| different from other categories in that, it does | | | | FoF is entrusted with the big task of ensuring that |
| not invest in other securities like stocks and | | | | your money is only invested in the best securities. |
| bonds. Instead, it holds portfolio of other | | | | He is entrusted with the task of checking that the |
| investment funds. In other words, it is a | | | | performance of your investment is maintained at |
| multi-manager type of investment. | | | | the best level possible. |
| Under this category there are also other sub | | | | FOFs are faced with some challenges as well, just |
| categories, all of which hold portfolios for different | | | | like all other types of investments. For example, |
| investment securities. For example, there are | | | | the rate of return is not always guaranteed; it |
| mutual FOF, hedge FOF, private equity FoF and | | | | may rise or fall depending on the market forces. |
| investment trust FOf. The features of all these | | | | In addition, FOFs are faced with higher |
| categories are significantly different from each | | | | management fees unlike other types of |
| other, depending on the type of securities they | | | | investments. This is because the portfolios that |
| invest in, the risk factor involved as well as the | | | | they hold are also subject to some management |
| type of management required in each. | | | | fees which are charged indirectly through the |
| Due to their collective nature, fund of funds types | | | | FOFs. |