{"id":17227,"date":"2026-05-11T01:38:09","date_gmt":"2026-05-11T08:08:09","guid":{"rendered":"https:\/\/shoonya.com\/blog\/?p=17227"},"modified":"2026-05-11T01:38:09","modified_gmt":"2026-05-11T08:08:09","slug":"fund-of-funds","status":"publish","type":"post","link":"https:\/\/shoonya.com\/blog\/fund-of-funds\/","title":{"rendered":"What is a Fund of Funds in Mutual Funds? Benefits, Risks and How it Works"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_87 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\"><p class=\"ez-toc-title\" style=\"cursor:inherit\"><\/p>\n<\/div><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#What_is_a_Fund_of_Funds\" >What is a Fund of Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#How_Does_a_Fund_of_Funds_Work\" >How Does a Fund of Funds Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#What_are_the_Types_of_Fund_of_Funds\" >What are the Types of Fund of Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#What_are_the_Benefits_of_Fund_of_Funds\" >What are the Benefits of Fund of Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#What_are_the_Risks_of_Fund_of_Funds\" >What are the Risks of Fund of Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#Fund_of_Funds_vs_Mutual_Funds_What_is_the_Difference\" >Fund of Funds vs Mutual Funds: What is the Difference?&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#Fund_of_Funds_vs_ETF_What_is_the_Difference\" >Fund of Funds vs ETF: What is the Difference?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#Key_Considerations_Before_Investing_in_FoFs\" >Key Considerations Before Investing in FoFs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#Taxation_of_Fund_of_Funds_in_India_2026\" >Taxation of Fund of Funds in India (2026)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#End_Note\" >End Note<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/#Fund_of_Funds_FAQs\" >Fund of Funds: FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/shoonya.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/\">Investing<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/mutual-funds\/\">Mutual Funds<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\"><strong>What is a Fund of Funds in Mutual Funds? Benefits, Risks and How it Works<\/strong><\/span><\/span><\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Choosing the right mutual fund is not always easy. Every scheme comes with a different asset class, risk level, strategy, and fund manager, which can make diversification feel complicated for beginners.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A fund of funds simplifies this by investing in other mutual funds rather than directly in stocks, bonds, gold, or other securities. This structure is gaining global attention, with the FoF market projected to grow from <strong>USD 15.3 billion in 2024 to USD 23.1 billion by 2030<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this blog, we will explain the meaning of a fund of funds, how a FoF works, its benefits, risks, and key differences from regular mutual funds.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Fund_of_Funds\"><\/span>What is a Fund of Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A Fund of Funds (FoF) or \u201csuper funds\u201d&nbsp; is a mutual fund that invests in a portfolio of other mutual funds, ETFs, or underlying funds instead of directly investing in stocks, bonds, gold, or other securities.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It acts like a structure that holds multiple underlying funds, helping investors access diversification and professional fund selection through a single investment.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Does_a_Fund_of_Funds_Work\"><\/span>How Does a Fund of Funds Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A fund of funds works by collecting capital from investors and investing it in other mutual fund schemes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Here is how it usually works:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The investor puts money into a fund of funds just like any other mutual fund.<\/li>\n\n\n\n<li>The asset management company collects money from different investors.<\/li>\n\n\n\n<li>The FoF fund manager chooses other mutual funds or ETFs based on the scheme\u2019s objective.<\/li>\n\n\n\n<li>They often maintain a portfolio of 10\u201320 different funds to mitigate risk.\u00a0<\/li>\n\n\n\n<li>The performance of the FoF depends on how the selected underlying funds perform.<\/li>\n\n\n\n<li>Even though the FoF invests in multiple funds, the investor sees one <a href=\"https:\/\/shoonya.com\/blog\/what-is-nav\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/what-is-nav\/\" target=\"_blank\" rel=\"noreferrer noopener\">Net Asset Value<\/a> or NAV, for the FoF scheme.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Types_of_Fund_of_Funds\"><\/span>What are the Types of Fund of Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A fund of funds can be divided into the schemes it invests in. Some FoFs invest in domestic mutual funds, while others invest in ETFs, gold funds, international funds, or multiple asset classes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Here are the common types of fund of funds:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Type of Fund of Funds<\/strong><\/td><td><strong>Meaning<\/strong><\/td><\/tr><tr><td><strong>Asset Allocation \/ Multi-Asset FoFs<\/strong><\/td><td>Invest in a mix of equity, debt, gold, or other asset classes to spread risk across different investment categories.<\/td><\/tr><tr><td><strong>International FoFs<\/strong><\/td><td>Invest in overseas mutual funds or ETFs to give investors exposure to global markets through an Indian mutual fund.<\/td><\/tr><tr><td><strong>ETF-based FoFs<\/strong><\/td><td>Invest mainly in exchange-traded funds. These may track indices, sectors, commodities, or other ETF-based strategies.<\/td><\/tr><tr><td><strong>Gold FoFs<\/strong><\/td><td>Invest in gold ETFs or gold-related funds to gain exposure to gold without buying physical gold.<\/td><\/tr><tr><td><strong>Active FoFs<\/strong><\/td><td>The fund manager actively selects and reallocates the underlying funds to meet the scheme\u2019s investment objective.<\/td><\/tr><tr><td><strong>Passive FoFs<\/strong><\/td><td>Invest in index funds or passive ETFs that aim to track a specific market index or benchmark.<\/td><\/tr><tr><td><strong>Sector FoFs<\/strong><\/td><td>Invest in funds focused on specific sectors such as banking, technology, healthcare, or infrastructure.<\/td><\/tr><tr><td><strong>Regional FoFs<\/strong><\/td><td>Invest in funds focused on a specific region or geography, such as Asia-Pacific, Europe, or emerging markets.<\/td><\/tr><tr><td><strong>Domestic Mutual Fund FoFs<\/strong><\/td><td>Invest in other Indian mutual fund schemes based on the FoF\u2019s objective.<\/td><\/tr><tr><td><strong>Private Equity FoFs<\/strong><\/td><td>Invest in multiple private equity funds. These are usually meant for institutional or high-net-worth investors, not regular retail mutual fund investors.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Benefits_of_Fund_of_Funds\"><\/span>What are the Benefits of Fund of Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A fund of funds can be useful for diversification and for consolidating fund selection into a single structure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Key benefits of FoF mutual funds include:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Professional fund selection<\/strong><strong><br><\/strong>The FoF fund manager selects and reviews the underlying funds in line with the scheme objective.<\/li>\n\n\n\n<li><strong>Convenience for investors<\/strong><strong><br><\/strong>Investors do not have to compare, buy, and track many funds separately.<\/li>\n\n\n\n<li><strong>Access to different asset classes<\/strong><strong><br><\/strong>Depending on the FoF, investors may get exposure to gold, global markets, ETFs, equity, or debt funds.<\/li>\n\n\n\n<li><strong>Useful for beginners<\/strong><strong><br><\/strong>FoFs can be easier to understand for investors who want a managed fund route instead of building a multi-fund portfolio themselves.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read About:<\/strong><em> <\/em><strong><em><a href=\"https:\/\/shoonya.com\/blog\/difference-between-direct-and-regular-mutual-fund\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/difference-between-direct-and-regular-mutual-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">What Is the Difference Between Direct and Regular Mutual Funds<\/a>?<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Risks_of_Fund_of_Funds\"><\/span>What are the Risks of Fund of Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The primary risks of Fund of Funds (FoFs) include double-layering fees, diluting high-performing assets, and tax inefficiency.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Here are the key risks of FoF mutual funds:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Higher cost structure<\/strong><strong><br><\/strong>A FoF may have its own expense ratio, and the underlying funds may also charge expenses. This can increase the total cost for investors.<\/li>\n\n\n\n<li><strong>Market risk<\/strong><strong><br><\/strong>The FoF\u2019s returns depend on the performance of the underlying funds. If those funds perform poorly, the FoF may also give weak returns.<\/li>\n\n\n\n<li><strong>Limited control<\/strong><strong><br><\/strong>Investors cannot directly choose which funds the FoF invests in. The selection is handled by the fund manager.<\/li>\n\n\n\n<li><strong>Portfolio overlap<\/strong><strong><br><\/strong>Some underlying funds may hold similar stocks, sectors, or assets. This can reduce the actual diversification benefit.<\/li>\n\n\n\n<li><strong>Tax impact<\/strong><strong><br><\/strong>Taxation depends on the FoF\u2019s structure and where it invests. Gold, international, debt-oriented, and equity-oriented FoFs may be taxed differently.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fund_of_Funds_vs_Mutual_Funds_What_is_the_Difference\"><\/span>Fund of Funds vs Mutual Funds: What is the Difference?&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A regular mutual fund usually invests directly in securities such as stocks, bonds, gold, or money market instruments. A fund of funds, on the other hand, invests in other mutual fund schemes or ETFs.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Basis<\/strong><\/td><td><strong>Regular Mutual Fund<\/strong><\/td><td><strong>Fund of Funds<\/strong><\/td><\/tr><tr><td><strong>Meaning<\/strong><\/td><td>A scheme that invests directly in stocks, bonds, gold, or other assets<\/td><td>A scheme that invests in other mutual funds or ETFs<\/td><\/tr><tr><td><strong>Investment Selection<\/strong><\/td><td>Fund manager selects securities<\/td><td>Fund manager selects underlying funds<\/td><\/tr><tr><td><strong>Portfolio Exposure<\/strong><\/td><td>Exposure depends on the securities held by the scheme<\/td><td>Exposure depends on the funds held inside the FoF<\/td><\/tr><tr><td><strong>Diversification<\/strong><\/td><td>Diversification happens within a scheme portfolio<\/td><td>Diversification happens across multiple underlying funds<\/td><\/tr><tr><td><strong>Cost Structure<\/strong><\/td><td>Usually has one expense ratio<\/td><td>May include FoF-level expenses and underlying fund expenses<\/td><\/tr><tr><td><strong>Control for Investor<\/strong><\/td><td>The investor chooses the mutual fund category directly<\/td><td>Investor relies on FoF manager to choose underlying funds<\/td><\/tr><tr><td><strong>Suitable For<\/strong><\/td><td>Investors who want direct exposure to a specific fund category<\/td><td>Investors who want exposure to multiple funds through one scheme<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fund_of_Funds_vs_ETF_What_is_the_Difference\"><\/span>Fund of Funds vs ETF: What is the Difference?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The main difference is the investment route. FoFs are bought like mutual funds, while ETFs are bought and sold on the stock exchange through a demat and trading account.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Point of Difference<\/strong><\/td><td><strong>Fund of Funds<\/strong><\/td><td><strong>ETFs<\/strong><\/td><\/tr><tr><td><strong>Investment route<\/strong><\/td><td>Bought like a mutual fund<\/td><td>Bought on the stock exchange<\/td><\/tr><tr><td><strong>Demat account<\/strong><\/td><td>Usually not required<\/td><td>Required<\/td><\/tr><tr><td><strong>Pricing<\/strong><\/td><td>Based on NAV<\/td><td>Based on the live market price<\/td><\/tr><tr><td><strong>Cost<\/strong><\/td><td>May include FoF and underlying fund costs<\/td><td>Usually lower, but trading charges may apply<\/td><\/tr><tr><td><strong>Suitable for<\/strong><\/td><td>Investors who prefer mutual fund-style investing<\/td><td>Investors who are comfortable with exchange trading<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Considerations_Before_Investing_in_FoFs\"><\/span>Key Considerations Before Investing in FoFs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Before investing in a <strong>Fund of Funds (FoF)<\/strong>, check the fees, underlying funds, tax treatment, and whether the scheme aligns with your investment horizon.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Total Expense Ratio:<\/strong><strong><br><\/strong>FoFs may incur costs such as FoF management costs and the expense ratios of the underlying funds. This can make them costlier than investing directly in a single mutual fund.<\/li>\n\n\n\n<li><strong>Tax Treatment:<\/strong><strong><br><\/strong>FoF taxation depends on the type of scheme and the assets it invests in. Equity-oriented mutual funds generally have updated STCG and LTCG rules after the July 2024 tax changes.<\/li>\n\n\n\n<li><strong>Fund Performance:<\/strong><strong><br><\/strong>Do not only check the FoF\u2019s past returns. Also, review the performance and consistency of the underlying funds across different market phases.<\/li>\n\n\n\n<li><strong>Liquidity and Exit Load:<\/strong><strong><br><\/strong>Check whether the FoF has an exit load if units are redeemed before a specified period.\u00a0<\/li>\n\n\n\n<li><strong>Portfolio Overlap:<\/strong><strong><br><\/strong>A FoF may invest in multiple funds, but those funds may hold similar stocks, sectors, or asset classes. Too much overlap can reduce the real diversification benefit.<\/li>\n\n\n\n<li><strong>Fund Manager Expertise:<\/strong><strong><br><\/strong>Since the FoF manager selects the underlying funds, review the fund house, strategy, and fund management approach.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxation_of_Fund_of_Funds_in_India_2026\"><\/span>Taxation of Fund of Funds in India (2026)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">For FY 2026-27, many Fund of Funds (FoFs) in India may be taxed as per the investor\u2019s applicable income tax slab if they do not meet the required domestic equity exposure criteria.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Here\u2019s the key tax rules for different types of FoFs<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>International FoFs:<\/strong> Gains are generally taxed as per the investor\u2019s applicable income tax slab if the scheme falls under specified mutual fund treatment.<\/li>\n\n\n\n<li><strong>Debt-oriented FoFs:<\/strong> If the scheme invests more than 65% in debt and money market instruments, or 65% or more in such funds, gains are treated under specified mutual fund rules.<\/li>\n\n\n\n<li><strong>Equity-oriented FoFs:<\/strong> If the FoF qualifies under equity rules:<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>LTCG on qualifying equity FoFs:<\/strong> Gains above \u20b91.25 lakh are taxed at 12.5%.<\/li>\n\n\n\n<li><strong>STCG on qualifying equity FoFs:<\/strong> Gains are taxed at 20%.<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>TDS: <\/strong>It is deducted on dividends over \u20b910,000\u00a0<\/li>\n\n\n\n<li><strong>Dividends:<\/strong> They are taxed at the investor&#8217;s applicable income tax slab rate.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"End_Note\"><\/span>End Note<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A fund of funds can be a simple way to access multiple mutual funds through one scheme. However, FoFs should not be chosen only for convenience. Investors should check the underlying funds, expense ratio, tax treatment, risk level, and investment horizon before investing.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em><a href=\"https:\/\/shoonya.com\/open-an-account\/?utm_source=blog&amp;utm_medium=organic&amp;utm_campaign=cta\" type=\"link\" id=\"https:\/\/shoonya.com\/open-an-account\/?utm_source=blog&amp;utm_medium=organic&amp;utm_campaign=cta\" target=\"_blank\" rel=\"noreferrer noopener\">Open a demat account<\/a> with Shoonya to explore ETFs, stocks, bonds, and other investment options with transparent pricing.\u00a0<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fund_of_Funds_FAQs\"><\/span>Fund of Funds: FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1778485015810\"><strong class=\"schema-faq-question\"><strong>1. What is FoF in a mutual fund?<\/strong><\/strong> <p class=\"schema-faq-answer\">A FoF, or Fund of Funds, is a mutual fund that invests in other mutual funds instead of directly investing in stocks, bonds, gold, or other securities.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485016488\"><strong class=\"schema-faq-question\"><strong>2. What is an example of a fund of funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">A Gold Fund of Funds is a common example. It invests in a Gold ETF, allowing investors to gain gold exposure through a mutual fund rather than buying physical gold or trading ETFs directly.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485017168\"><strong class=\"schema-faq-question\"><strong>3. What is the difference between a normal mutual fund and FoF?<\/strong><\/strong> <p class=\"schema-faq-answer\">A normal mutual fund invests directly in assets like stocks, bonds, or gold. A FoF invests in other mutual funds or ETFs, giving investors fund-level diversification through one scheme.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485053474\"><strong class=\"schema-faq-question\"><strong>4. Are FoFs suitable for beginners?<\/strong><\/strong> <p class=\"schema-faq-answer\">FoFs can be suitable for beginners who want exposure to multiple funds through one scheme. However, investors should check the cost, risk level, tax treatment, and underlying funds before investing.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485054345\"><strong class=\"schema-faq-question\"><strong>5. Which is better, Gold ETF or Gold ETF FoF?<\/strong><\/strong> <p class=\"schema-faq-answer\">A Gold ETF may suit investors who have a demat account and are comfortable trading on the stock exchange. A Gold ETF FoF may suit investors who prefer investing through the mutual fund route rather than buying ETFs directly.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485078146\"><strong class=\"schema-faq-question\"><strong>6. Who manages a fund of funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">A Fund of Funds is managed by a professional fund manager appointed by the asset management company. The manager selects and reviews the underlying funds based on the scheme&#8217;s objective.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485087627\"><strong class=\"schema-faq-question\"><strong>7. Which one is better, ETF or FoF?<\/strong><\/strong> <p class=\"schema-faq-answer\">An ETF may be better for investors who want exchange-traded exposure and lower costs. A FoF may be more convenient for investors who prefer mutual fund-style investing and do not want to trade ETFs directly.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778485104275\"><strong class=\"schema-faq-question\"><strong>8. What is the difference between private equity and fund of funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">Private equity invests directly in private companies, while a fund of funds invests in other funds. A private equity FoF invests in multiple private equity funds, usually meant for institutional or high-net-worth investors.<\/p> <\/div> <\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Source: <\/strong>https:\/\/investor.sebi.gov.in\/fund_of_fund.html<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Disclaimer<\/mark>: This content is for education and awareness purposes only and should not be considered investment advice or a recommendation. Investments in securities markets are subject to market risks. Read all the related documents carefully before investing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Choosing the right mutual fund is not always easy. Every scheme comes with a different asset class, risk level, strategy, and fund manager, which can make diversification feel complicated for beginners. A fund of funds simplifies this by investing in other mutual funds rather than directly in stocks, bonds, gold, or other securities. This structure &hellip; <a href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;What is a Fund of Funds in Mutual Funds? Benefits, Risks and How it Works&#8221;<\/span><\/a><\/p>\n","protected":false},"author":17,"featured_media":17229,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[12],"tags":[9854,9856,9853,9850,9860,9861,9851,9858,9859,9862,9857,9855,9852],"class_list":["post-17227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds","tag-fof-fund","tag-fof-in-mutual-fund","tag-fof-mutual-fund","tag-fund-of-funds","tag-fund-of-funds-example","tag-fund-of-funds-in-india","tag-fund-of-funds-meaning","tag-fund-of-funds-mutual-funds","tag-fund-of-funds-scheme","tag-fund-of-funds-vs-mf","tag-what-is-fof","tag-what-is-fof-in-mutual-fund","tag-what-is-fund-of-funds"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fund of Funds: Meaning, Risks and How FoF Works<\/title>\n<meta name=\"description\" content=\"FoF is a mutual fund that invests in other mutual funds, helping investors access multiple schemes through one fund instead of buying each scheme separately.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fund of Funds: Meaning, Risks and How FoF Works\" \/>\n<meta property=\"og:description\" content=\"FoF is a mutual fund that invests in other mutual funds, helping investors access multiple schemes through one fund instead of buying each scheme separately.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/shoonya.com\/blog\/fund-of-funds\/\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ShoonyaApp\/\" \/>\n<meta property=\"article:published_time\" content=\"2026-05-11T08:08:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2026\/05\/fund-of-funds.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"atulrana\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Fund of Funds: Meaning, Risks and How FoF Works\" \/>\n<meta name=\"twitter:description\" content=\"FoF is a mutual fund that invests in other mutual funds, helping investors access multiple schemes through one fund instead of buying each scheme separately.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2026\/05\/fund-of-funds.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@shoonyaapp\" \/>\n<meta name=\"twitter:site\" content=\"@shoonyaapp\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"atulrana\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/fund-of-funds\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/fund-of-funds\\\/\"},\"author\":{\"name\":\"atulrana\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#\\\/schema\\\/person\\\/753b3e2352dc2915e7069273091f9124\"},\"headline\":\"What is a Fund of Funds in Mutual Funds? 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What is FoF in a mutual fund?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A FoF, or Fund of Funds, is a mutual fund that invests in other mutual funds instead of directly investing in stocks, bonds, gold, or other securities.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485016488","position":2,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485016488","name":"2. What is an example of a fund of funds?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A Gold Fund of Funds is a common example. It invests in a Gold ETF, allowing investors to gain gold exposure through a mutual fund rather than buying physical gold or trading ETFs directly.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485017168","position":3,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485017168","name":"3. What is the difference between a normal mutual fund and FoF?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A normal mutual fund invests directly in assets like stocks, bonds, or gold. A FoF invests in other mutual funds or ETFs, giving investors fund-level diversification through one scheme.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485053474","position":4,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485053474","name":"4. Are FoFs suitable for beginners?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"FoFs can be suitable for beginners who want exposure to multiple funds through one scheme. However, investors should check the cost, risk level, tax treatment, and underlying funds before investing.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485054345","position":5,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485054345","name":"5. Which is better, Gold ETF or Gold ETF FoF?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A Gold ETF may suit investors who have a demat account and are comfortable trading on the stock exchange. A Gold ETF FoF may suit investors who prefer investing through the mutual fund route rather than buying ETFs directly.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485078146","position":6,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485078146","name":"6. Who manages a fund of funds?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A Fund of Funds is managed by a professional fund manager appointed by the asset management company. The manager selects and reviews the underlying funds based on the scheme's objective.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485087627","position":7,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485087627","name":"7. Which one is better, ETF or FoF?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"An ETF may be better for investors who want exchange-traded exposure and lower costs. A FoF may be more convenient for investors who prefer mutual fund-style investing and do not want to trade ETFs directly.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485104275","position":8,"url":"https:\/\/shoonya.com\/blog\/fund-of-funds\/#faq-question-1778485104275","name":"8. What is the difference between private equity and fund of funds?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Private equity invests directly in private companies, while a fund of funds invests in other funds. A private equity FoF invests in multiple private equity funds, usually meant for institutional or high-net-worth investors.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/17227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/comments?post=17227"}],"version-history":[{"count":4,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/17227\/revisions"}],"predecessor-version":[{"id":17233,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/17227\/revisions\/17233"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/media\/17229"}],"wp:attachment":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/media?parent=17227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/categories?post=17227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/tags?post=17227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}