Synopsis
The usefulness of FoFs reduces drastically when it comes to the domestic scenario. Some of the recent launches are FoFs that invest in their own ETFs. Value addition is low here because investors can buy the primary ETFs directly from the secondary market. However, this may be useful for a section of investors.
A flurry of fund of funds (FoF) have been launched in the recent past and the investor has many to choose from. However, here is what every investor should keep in mind. Since FoFs invest in other mutual fund schemes, there arises a duplication of costs. Investors have to bear the expense ratio of the original schemes as well as that of FoFs. For instance, Nippon India Asset Allocator FoF investors have to bear the expense ratio of the FoF
Bet on fund of funds (FoFs) only if it serves a specific purpose
Synopsis
Investors can avoid domestic FoFs as they may not add much value to the existing portfolio. While it makes sense to use the FoF route for global diversification, it is better to avoid very narrow or regional themes.
A flurry of fund of funds (FoF) have been launched in the recent past and the investor has many to choose from. However, here is what every investor should keep in mind. Since FoFs invest in other mutual fund schemes, there arises a duplication of costs. Investors have to bear the expense ratio of the original schemes as well as that of FoFs. For instance, Nippon India Asset Allocator FoF investors have to bear the expense ratio of the FoF