A Mutual Fund of Funds is often referred to as a Mutual Fund Portfolio or a Select Portfolio. They are Mutual Fund investments that do not directly buy and hold individual stocks and bonds like other Mutual Funds; Mutual Funds of Funds are comprised of and invest directly in other Mutual Funds.
A Fund of Funds Offers Diversification
The advantage of investing in a Mutual Fund of Funds gives Investors access to a wide variety of Mutual Funds and several different investment options with the simplicity of buying only one Mutual Fund. We have access to a variety of different investments, asset classes, and securities all with the purchase of only one Mutual Fund.
Buying a Mutual Fund of Funds allows us to purchase all of the Mutual Funds that we may want without having the required minimum for each individual fund. If we wish to invest in 5 different Mutual Funds and the minimum required investment is $5000 for each Fund, we would need a minimum of $25,000 to invest. However, if we buy a Fund of Funds that has all or most of the other Mutual Funds that we want to buy, we only need the required investment minimum for one fund, the Mutual Fund of Funds.
Mutual Fund of Funds Offer Simplified Solutions
Many Mutual Fund Companies offer Mutual Fund of Funds to their investment clients because they know that clients want simplified solutions. If we own several Mutual Funds our quarterly account statement could be several pages long. The details of our quarterly account statement include our Mutual Fund transactions along with the changes in price valuations. However, if we only have one Mutual Fund our statement will be just as detailed but it will be less confusing and less complicated because the information is condensed for only one fund.
A Fund of Funds is Available to All Investors
Mutual Fund of Funds are available to all investors regardless of their investment objectives and financial goals. Mutual Fund of Funds are available in both retirement savings accounts as well as non registered investment accounts. We can purchase Mutual Fund of Funds in any type of investment account where Mutual Funds are available.
Mutual Fund of Funds offer different investment options for all types of different investors. Many Mutual Fund Companies offer Income Portfolios, Balanced Portfolios, as well as Equity Portfolios which give Investors access to several different Mutual Funds while having to buy only one Mutual Fund of Funds.
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Find more information on Globe Advisor mutual funds.
Kristina Tahnyak
Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.
Normally fund of funds is associated with hedge funds. I personally wont like the idea of mutual fund investing in another mutual funds as already mutual funds wont be giving you a extreme high returns but when your fund invests in other mutual fund you are practically paying double fund management fees so it eventually reduces your expected return.
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