With the development of social economy, people pay more and more attention to financial management, and investment funds have become the first choice for many people. Among them, FOF fund is a relatively new investment method, which has been paid more and more attention in the domestic market. So what are the advantages and disadvantages of FOF fund?

First, advantages

1. Reduce risk

FOF fund is a fund product with other funds as the investment target, which is equivalent to a basket of funds and can help investors reduce the risk of investing in a single fund. Because FOF funds spread their funds among multiple funds, even if some of them perform poorly, the risks of the whole portfolio will be balanced.

2. specialization

The fund manager of FOF Fund is a special team, which can analyze and evaluate the risks and benefits of various fund products, optimize and adjust the investment portfolio, and regularly allocate assets according to market conditions, which is more professional and systematic.

3. Flexibility

The fund portfolio of FOF fund can be adjusted at any time according to market changes, which has good flexibility. In some fund products, such as index funds, the investment performance is affected by the fundamentals of the underlying index. FOF funds can avoid some risks through asset allocation, and can also invest in a wider range of targets.

Second, shortcomings.

1. High cost

The biggest disadvantage of FOF fund is that its cost is higher than other fund products. Because it involves multiple management levels, investing in FOF foundation repeatedly charges some fees, such as fund management fees and investment consultant fees.

2. Lack of transparency

The transparency of FOF funds is not high, so it is not easy to know all the funds and securities held in this portfolio product. Therefore, it is difficult for investors to evaluate the quality and risk level of all funds in the portfolio.

3. Asset management is difficult

It is difficult to manage the assets of FOF fund. Because the FOF fund invests in other funds, the management should not only manage the FOF fund, but also coordinate with the management of the fund, which is relatively complicated.

Generally speaking, FOF funds benefit more than other funds. For long-term investors, reducing risks, professional management and flexibility can bring obvious advantages. Investors can also offset some cost losses by reducing operations and better realizing long-term financial planning.