FOF(Fund of Funds), which originally means "fund in fund", is a kind of fund that invests in other securities investment funds. It does not directly invest in stocks or bonds, and its investment scope is limited to other funds. By holding other securities investment funds, it indirectly holds securities assets such as stocks and bonds. It is a new fund variety that combines fund product innovation and sales channel innovation.

it can more effectively find out the superior varieties from various funds with uneven profitability, and help investors avoid risks and gain profits to the greatest extent.

advantages of FOF:

1. lowering the purchase threshold

due to the problem of funds, it is difficult for investors to buy all the favorite funds in the market, and buying fof funds is equivalent to buying multiple funds, which reduces the purchase cost.

2. Diversify risks

FOF funds are screened by fund managers, and multiple funds can be purchased, which diversifies investment risks compared with the situation that investors only buy one or two funds.

3. Be more professional

Choose a FOF fund created by a professional investment institution. Under normal circumstances, a conscientious fund manager can use the data of a professional institution to be richer, more professional and more objective in product analysis.

? Shortcomings of FOF:

1. Double charging problem

When choosing FOF, on the one hand, you have to pay the fees to the FOF manager; On the other hand, FOF products imply the fees paid to portfolio holding funds during their operation. Therefore, under normal circumstances, the total cost of FOF funds will be higher than that of ordinary funds.

2. Large FOF may indirectly harm the interests of fund holders

For example, when large-scale FOF funds are invested in smaller fund products, the entry and exit of FOF funds will have an impact on the net value and income of the invested funds, thus harming the interests of basic fund holders.