Fund Of Funds


DEFINITION of 'Fund Of Funds'

A mutual fund that invests in other mutual funds.

This method is sometimes known as "multi-management".


A fund of funds allows investors to achieve a broad diversification and an appropriate asset allocation with investments in a variety of fund categories that are all wrapped up into one fund. However, if the fund of funds carries an operating expense, investors are essentially paying double for an expense that is already included in the expense figures of the underlying funds.

Historically, a fund of funds showed an expense figure that didn't always include the fees of the underlying funds. As of January 2007, the SEC began requiring that these fees be disclosed in a line called "Acquired Fund Fees and Expenses" (AFFE).

  1. Portfolio

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  2. Diversification

    A risk management technique that mixes a wide variety of investments ...
  3. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  4. Master Fund

    In general, an investment vehicle that enables individual investors ...
  5. Fund Manager

    The person(s) resposible for implementing a fund's investing ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
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  2. Can mutual funds invest in hedge funds?

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  3. What are the risks of annuities in a recession?

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  4. Do financial advisors get paid by mutual funds?

    Financial advisors are reimbursed by mutual funds in exchange for the investment and financial advice they provide. A financial ... Read Full Answer >>
  5. Why is fiduciary duty so important?

    Fiduciary duty is one the most important professional obligations. It basically provides a much-needed protection for individuals ... Read Full Answer >>
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