What is the meaning of FoF mutual funds? I recently invested in Nasdax Index FoF fund, what does that imply?"
FoF stands for Fund of Funds
A mutual fund that invests in other mutual funds.Different FoFs have vastly different objectives.
The best way to know about the objective of any particular FoF is to read the SID (Scheme Information Document).
FoFs are often used when a mutual fund’s objective is to be very diverse.
For example, let’s say there is a mutual fund that aims to invest in the emerging markets of the world.
There are so many countries in the world that can be categorised as emerging markets.
That makes it difficult for one mutual fund to invest — too much research and market knowledge required of different countries.
So in such a case, this mutual fund will invest in different mutual funds that invest in those countries (one that invests in ABC country, one that invests in XYZ country, and so on).
