When investing in graded securities investment funds , you usually hear such two terms, one is called a fund of funds and the other is called a sub-fund. So what is a fund of funds? What is the relationship between the parent fund and the sub-fund?
Fund of Funds Overview:
“Fund of Funds” FOF (Fund of Funds) is a fund dedicated to investing in other securities investment funds. FoF does not directly invest in stocks or bonds. Its investment scope is limited to other funds. It indirectly holds securities assets such as stocks and bonds by holding other securities investment funds. It is a new type of fund that combines innovation in fund products and sales channels.
FOF features:
- Less risk
Investment risk is the most concerned issue for every investor. For New Fundamentals, facing hundreds of different funds in the market, the difficulty and risk of personal selection are not small, and in order to avoid risks, what do you always think about? Types of funds are bought a little. FoFs is actually a fund that helps investors buy a “basket of funds” at one time, and selects funds through experts to effectively reduce unsystematic risks.
Selecting a single fund is risky and difficult, and FoFs greatly reduces the risk of investing in funds by investing in a portfolio of funds. FoFs have also shown their stability relative to funds by targeting their investment population to those with lower risk appetites.
- The income is slightly lower
Although the brokerages that launched FoFs all claim that their products are characterized by “cost savings and high returns”, since it is impossible for FoFs to invest in all stock funds in investment funds, it is necessary to allocate a certain amount of currency or bond funds, and the returns are definitely not stocks. Funds have high returns, especially in bull markets. Professionals believe that if you have professional vision or have reliable investment experts around you, you don’t need to be too cautious when the market continues to be optimistic. Funds are long-term investment products. Although this year’s return rate cannot be compared with last year’s, the profit probability of investing in stock funds is theoretically higher than that of relatively conservative FoFs.