Want to become rich? Try this mutual fund of funds; It is tailored to make you wealthy
Mutual Fund investments: In the fund of funds, your money is not invested directly into the equity and bonds as it happens in the case of a mutual fund scheme.
Mutual Fund investments are growing at a rapid rate in India and to boost money-making opportunities innovation by various mutual funds houses operating in India has leaped forward too. After making various funds that are a mix of equity and debt investment options, there are now available fund of funds schemes too for mutual fund investors.
So, who can take benefit of this bunch of mutual funds? According to the investment experts, it helps an investor to get services of a fund manager. Now, once they invest in fund of funds, they get an additional manager who will keep an eye on the performance of the various mutual fund managers in which investors' money has been invested.
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What is Fund of Funds?
Speaking on this type of mutual fund scheme Kshitiz Mahajan, Co-founder at Complete Circle Consultants said, "In mutual funds, your fund manager invests in various stocks and bonds while in Fund of funds your fund manager invests in mutual funds. So, in short, you can call funds of funds as a mixed bag of mutual funds. In this type of mutual fund, your money is not invested directly into the equity and bonds as it happens in the case of a mutual fund scheme. But, in this fund of fund option, one can have services of various fund managers as there are fund managers whose job is to invest money accumulated by the mutual fund house from investors. Hence, when your money gets invested in various mutual funds, your money gets the various layers of fund managers making your chances to garner money in the future and become rich."
Risk in Fund of Funds
On the risk factor involved in the fund of funds, Kshitiz said, "In one mutual fund, you get fund managers of the mutual fund house, who outperform the market and fetch more returns for the investor. However, in the case of funds of funds, you have various layers of fund managers handling one mutual fund. And there is one more layer of the mutual fund house in which you have invested. They keep an eye on the performance of the mutual funds in which they have invested. So, the risk factor in the fund of funds is comparatively lesser and in the case of returns, it gives the same returns in a long-term perspective."