INSUBCONTINENT EXCLUSIVE:
Mutual funds are mainly of two types - close-ended funds and open-ended fundsA mutual fund is a type of investment option where funds from
various investors are pooled together and invested in stocks, other money market instruments, and assets
Mutual funds are usually managed by fund managers who allocate the money in order to gain capital and income for the investors
A fund of funds (FOF) is similar to a mutual fund in terms of pooled funds from various investors
A fund of funds portfolio contains various underlying portfolios of funds.How do they work?In mutual funds, when investors invest in
securities, they are also buying partial ownership of the company and its assets.A fund of fund investment attempts to achieve an all-in-one
portfolio with proper asset allocation in a diverse variety of fund categories.AdvantagesThe advantage of investing in a mutual fund is it
is easier to invest in or exit a mutual fund scheme when the stock market prices are high and make a profit.A fund of funds investment is
lucrative for small-type retail investors who want to get better exposure at a lower risk rate
Investing in a fund of funds also offers these investors wealth management services.DisadvantagesA common disadvantage of both mutual funds
and fund of funds is that they both charge a high fee for the management of the fund account
Also, a higher investment fee does not guarantee promising returns.Types Of Mutual FundsMutual funds are mainly of two types - close-ended
funds, and open-ended funds
Mutual fund investment schemes are ideally suited for investors who are averse to risk and who wish to add financial discipline to their
life.Types Of Fund Of FundsThere are different types of fund of funds - gold funds, multi-manager fund of funds, international fund of funds
and exchange-traded funds
Fund of fund investments aim to provide an increase in returns by investing in a diversified portfolio that has minimal links
The ideal investors for this scheme are those who have a minimal pool of resources that they can afford to spare for an extended period of
Investors who have a low liquidity need are ideally suited for fund of funds schemes.
