Fund of funds
Also called FoF
A mutual fund that invests in other mutual funds or ETFs instead of directly in shares or bonds.
A fund of funds is a mutual fund that invests in other funds or ETFs instead of buying shares or bonds itself. It’s a convenient wrapper, for example a gold fund that buys a gold ETF for you, but it adds a second layer of expense ratio. See an example in gold ETF vs gold fund.
Questions people ask
What is a fund of funds?
A mutual fund whose holdings are units of other mutual funds or ETFs, rather than shares or bonds directly. Gold funds and many international funds work this way.
Why does a fund of funds cost more?
You pay two layers of expenses: the fund of funds' own expense ratio, plus the costs of the funds it invests in. Check both before comparing it with buying the underlying fund or ETF yourself.
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