Advantages and disadvantages of fof fund

1, with high professionalism. FOF funds decide their investment targets through senior researchers and voting meetings, so their decisions are often more professional and scientific, and they also determine the emotional trend of the market. Compared with individual investors, FOF funds dare to open positions at the bottom of the market and throw them at high positions.

2. spread risks. By investing in FOF funds and indirectly investing in multiple fund products, investors can effectively avoid the huge risk of putting eggs in one basket. At the same time, professional parent fund teams can also obtain certain expected annualized expected returns through asset allocation. Judging from the characteristics of expected annualized expected returns, the greatest significance of FOF fund is to reduce volatility.

3. Scale effect. As a channel, FOF fund can invest the funds raised by individual investors as institutional investors, so it can often invest in some private equity funds with high thresholds or scarce places.

(2) The shortcomings of the FOF fund are:

1, double charging mechanism. Since the FOF fund has two managers, namely the parent fund manager and the sub-fund manager, naturally, there will be double charges when the FOF fund collects management fees from investors. However, investors also need to realize that the management fee of FOF fund is paid to the parent fund manager, which can prevent investors from taking greater risks because of investing in a single fund, and can also help investors choose better targets and make investment suggestions in time. If you can pay a few thousandths of the management fee and choose a better fund, it is still worthwhile.

2. In the bull market, the expected annualized expected return of FOF fund is relatively lower than the stock base. This is also an inevitable problem. After all, the principle of FOF fund is to divide the funds into several funds, and pursue stable expected annualized expected returns while stabilizing fluctuations and diversifying risks. Therefore, after diversifying risks, FOF funds will also diversify some expected annualized expected returns. However, after this cliff-like stock market adjustment, more investors can correctly recognize the existence of risks and accept this disadvantage of FOF.

Extended data:

1.FoF (fund in fund) is a special fund invested in other securities investment funds. FoF does not directly invest in stocks or bonds, and its investment scope is limited to other funds. Indirectly holding securities assets such as stocks and bonds by holding other securities investment funds. It is a new type of fund that combines fund product innovation and sales channel innovation.

On the one hand, FoF binds multiple funds together, and investing in FoF is equivalent to investing in multiple funds at the same time, but the cost of individual investment is greatly reduced;

On the other hand, unlike pure sales plans such as fund supermarkets and fund bundle sales, FoF completely adopts the legal form of funds and operates according to the operation mode of funds; FoF contains the long-term investment strategy of the fund market. Like other funds, FOF is a financial instrument that can be invested for a long time.

2.FOF funds generally refer to funds in funds.

The biggest difference between the fund in the fund (FOF) and the open-end fund is that the fund in the fund takes the fund as the investment target, while the fund takes stocks, bonds and other securities as the investment target. It screens funds through professional institutions to help investors optimize the investment effect of funds.