Schemes of Mutual Funds.

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shyam.trivedi

Active Member
#2
#2
A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a Fund of Funds (FoF) scheme. An Fund of Funds (FoF) scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe. Reliance Mutual Fund Managers will enlighten on this further for the requirement of the investors.
 
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rvm123

Active Member
#3
#3
Normally a mutual fund will collect money from the investors and invest in the share of the companies which are in their area of operations like pharma, technology, mid-cap, large-cap, etc., whereas fund of funds will invest in the already existing mutual funds. In the first case, if the share price of companies in which the fund has invested goes up, its NAV also goes up. Whereas in fund of funds if the NAV of the funds in which they have invested goes up, the NAV of this fund will go up.

For example, if SBI pharma fund invests in some pharma companies and if their share prices goes up, the NAV of the pharma fund will go up.

If a fund of funds invest in funds like HDFC top 200, DSP Top 100, etc., if the NAV of these funds go up, the NAV of the fund of funds also goes up.
 
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