FOF refers to the fund in the fund. In other words, other funds directly buy stocks or bonds, while FOF funds specialize in buying stocks or bonds indirectly held by funds.
By holding diversified assets, FOF funds can realize and optimize asset allocation and hedge risks. Pension target fund is also a kind of FOF, but it is still different from ordinary FOF funds.
First of all, ordinary FOF funds are rich in investment targets, but pension target funds are specially set up for the elderly, with the purpose of meeting the financial needs of pension funds and pursuing long-term stable appreciation of pension assets.
Secondly, pension target funds have strict requirements for fund companies and fund managers. Generally speaking, ordinary FOF funds do not require managers, and pension target funds require fund companies to be established for two years, with no less than 20 investment and research teams, and no major violations of laws and regulations for three years.
Moreover, the common FOF fund is an open-end fund, which can be redeemed at any time, but the pension target fund is open on a regular basis, with the shortest closure period of 1 year. The pension target fund on Alipay is closed for three years.
Finally, the pension target fund also has requirements for the proportion of stock investment. If the closure period is 1 year, 3 years or 5 years, the investment proportion of equity assets shall not exceed 30%, 60% or 80%, and there is no special requirement for ordinary FOF funds.
Generally speaking, the supervision of the pension target fund by the regulatory authorities is still relatively strict, and its positioning is relatively clear, which has obvious pension characteristics and certain investment value.