What is fof? Funds of funds, namely FOF (Fund of Funds), are funds with funds as their main investment targets. According to the definition of the China Securities Regulatory Commission, it is a fund that invests more than 80% of fund assets in funds. The main terms of this consultation include: 1) Diversification investment requirements. A single fund shall not account for more than 20% of the FOF, and shall not hold other funds of funds. Except in exponential form. 2) FOF is not allowed to hold graded funds. 3) FOF shall not hold funds that have been in operation for less than one year and whose size is less than 200 million yuan disclosed in regular reports. 4) FOF shall not charge management fees for investments in its own fund products, as well as related application and redemption fees, sales and service fees, etc.
What are the advantages of FOF in asset allocation? Public funds have covered various fields such as stocks, bonds, gold, crude oil, commodities, etc. Needless to mention the first two (there are various active and passive products). In addition, there are several gold funds, crude oil funds, and many such as agricultural products. , non-ferrous metals and other commodity funds are still in the approval process, as well as equity investment funds, REITS, QDII funds, etc. Over the years, funds have opened up many fields, which really provides convenience for asset allocation! There is no need to open various stock accounts, bond accounts, or futures accounts, and there is no need to manage funds separately. Asset allocation can be achieved under a unified account (especially the internal FOF of the fund company), which greatly saves costs and improves efficiency!
U.S. FOF experience: Pension needs are the biggest driver. In 1985, the first FOF fund in the United States was pioneered: VanguardSTAR Fund. According to the information of "KiplinGEr's Personal Finance" magazine in 1986, this fund was to meet the needs of pensions. IRAs, Keoghs (Keogh plans, retirement plans for self-employed individuals), and other tax-advantaged plans. With the continuous growth of the US pension market and the transformation of pension plans from DB to DC, the mutual influence of market and supervision has simultaneously promoted the development and legislation of US FOF funds, making US FOF (including target date funds) flourish. According to ICI data for the third quarter of 2015, there are approximately 1,399 FOF funds in the United States, with a total size of approximately US$1.67 trillion, accounting for approximately 11% of the total size of US mutual funds (approximately US$15.27 trillion). Since 2000, the average annual growth rate of U.S. FOF has reached 27%.
Summary: The current FOF is the real FOF, let us wait and see!