Mutual Funds: What is ‘Fund of Funds’, which investors should invest


Mutual Funds: Investing in the ‘Fund of Funds’ category of mutual funds can be a good option if you want a good return on investment. ‘Fund of Funds’ are such schemes of mutual funds that invest in other mutual fund schemes. The ‘Fund of Funds’ does not hold shares or bonds of the company, the Fund of Funds holds units of other schemes. A Fund of Funds manager can invest in multiple schemes of his fund house or other fund houses.

It is beneficial for these investors
‘Fund of Funds’ is especially beneficial for such investors who are unable to invest in different investment options due to paucity of funds. You can diversify your portfolio with a small amount through ‘Fund of Funds’. It increases the potential for higher return on investment.

how many types

  • There are three types of ‘Funds of Funds’ – equities, debt funds, and those investing in international markets.
  • These three types cover almost all asset classes.


  • Earnings from equity funds are subject to short term capital gains (STCG) tax if investments are redeemed in less than 12 months. As per the existing rules 15% tax will be levied.
  • If the investment is more than 12 months, it will be considered as Long Term Capital Gains (LTCG) and 10% interest will be paid on it.

SIP It will be right to invest through

  • Instead of investing money all at once in mutual funds, one should invest through Systematic Investment Plan (SIP).
  • Through SIP, you invest a fixed amount in it every month.
  • The risk in investing through SIP is low as it is not affected much by market fluctuations.

(Investment advice in any fund is not given by ABP News here. The information given here is for informational purposes only. Mutual fund investments are subject to market risk, read all scheme documents carefully. NAV can fluctuate depending on the factors and forces influencing the security market including fluctuations in interest rates.The past performance of a mutual fund may not necessarily reflect the future performance of the schemes. The mutual fund does not guarantee or guarantee any dividend under any of the schemes and is subject to the availability and adequacy of distributable surplus. Investors are advised to review the prospectus carefully and seek specific legal, tax and scheme You are requested to seek expert professional advice regarding the financial implications of investing/participating in

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