Clone Fund
What Does Clone Fund Mean?
A mutual fund that replicates the performance or strategy of an existing mutual fund or index through the use of derivatives.
Investopedia explains Clone Fund
Clone funds were very common in Canada, where, until a legislative change in mid-2005, investors were limited in the amount of foreign investment they could have in their Registered Retirement Savings Plans (RRSP). For example, suppose a Canadian investor wanted to buy an S&P 500 index fund (a foreign investment) for his RRSP but had no more room for foreign content. To get around the foreign-content restrictions, he or she would have purchased an S&P 500 clone fund, which replicated the performance of the S&P 500 but was classified as a Canadian security because it was composed of derivatives trading in Canada.
Related Links
- Mutual Fund Basics Tutorial - Learn about the basics - and the pitfalls - of investing in mutual funds.
- Special Feature: Mutual Funds - Mutual funds are an inexpensive and easy way to benefit from diversification and professional management. See our mutual fund feature for everything you need to know.
- Coattail
Investor - Explore what stocks the world's top mutual funds and portfolio
managers hold!
