What Is A Fund Of Funds? - Channel3000.com

Channel3000.com
February 12, 2021 9:58 AM
E. Napoletano - Forbes Advisor
Posted:
Updated:
February 14, 2021 8:47 AM
A fund of funds is an investment vehicle that invests in mutual funds, exchange-traded funds (ETFs) or even hedge funds. When you invest in a fund of funds, you get an entire diversified investment portfolio at once, featuring broad exposure to many different asset classes with less risk involved.
How a Fund of Funds Works
With mutual funds,ETFs and hedge funds, investors buy shares and fund managers put the capital to work in assets like bonds and stocks, depending on the fund’s investment strategy.
A short-term municipal bond fund, for example, would use its investors’ money to build a portfolio of short-term municipal bonds. This gives participants the benefit of having a professional manager select investments for them while spreading out the risk across many individual securities.

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