Bamakhit October 23, 2022 No Comments A fund of funds is a mutual fund that invests in other mutual fund schemes. The fund manager invests in other mutual funds rather than directly.
A fund of funds is a mutual fund scheme that invests in other mutual fund schemes. The management of the fund invests in other mutual funds rather than directly in stocks or bonds.
Investors with varying risk tolerances and financial goals can take advantage of the portfolio’s design. The Fund of Funds provides advantages that enable investors to profit from diversification by investing in multiple fund categories.
The following are the most widely used Indian Funds:
Multi asset allocation funds are mutual funds that invest in gold, stock, debt, and other commodities among other asset classes.
The underlying investments in Gold Fund of Funds are Gold ETFs.
Mutual funds that invest in international securities include stocks and bonds issued by international corporations.
A fund of funds is a wise investment if a few things are taken into account.
Benefits: An investor can spread their money across a variety of funds representing various industries.
This fund-of-funds investment strategy in India can help one gain exposure to some of the best mutual funds, even with a small investment budget.
Investors are only responsible for paying taxes on Fund of Funds when the fund is redeemed. However, in India, both short-term and long-term capital gains are eligible for tax deductions based on the investor’s annual income and the time of investment.
The fund of funds plan is not subject to taxation if the fund manager rebalances the portfolio.
Disadvantages The fundamental concept of a fund of funds is that a mutual fund invests in a large number of other funds, which in turn invest in a variety of securities. It is possible for the Fund of Funds to acquire the same securities and stocks from other funds. Consequently, there is less room for variety.
The expenses of the Fund of Funds include the underlying funds controlled by the Fund of Funds.
Who requires investment?
Investors looking to make long-term investments can take advantage of the fund-of-funds advantages by investing in such funds.
The fund of funds in India aims to maximize returns while simultaneously minimizing overall risk by investing in a diverse portfolio.
A pool of funds can be utilized by those with more limited financial resources, a lower demand for liquidity, and the ability to save money for an extended period of time. Because these funds invest in a variety of mutual funds, the investor also has access to high-value funds.
These funds are also available to inexperienced novice investors looking for a diversified, long-term investment option.
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