Definition for : Fund of Funds

A "Fund of Funds" ("FoF") designates a fund which does not invest directly in shares, bonds or other securities, but invests in a portfolio of other funds. The focus can be on Private equity Investment (for a Private equity FoF), or on Hedge fund (for a Hedge fund FoF), Mutual Fund (for a Mutual Fund FoF). A FoF allows a greater Diversification of risks, but costs more in management fees. A "Fettered FoF" designates one where the invesment is limited to the range of funds also manageed by the FoF's Investment manager; the opposite being an "Unfettered FoF".
(See Chapter 18 Risk and return of the Vernimmen)
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