what is a fund of funds fof 
a fund of funds fof is one that instead of investing in a pool of securities like stocks and bonds buys shares in other funds these multi manager investments offer investors further diversification and access to the expertise of other skilled fund managers the fund of funds approach has grown in recent years particularly among institutional investors like pension funds and endowments seeking to spread risk and maximize returns while open end funds as a whole have grown 42 in assets worldwide from the first quarter of 2020 to the end of 2023 fofs have grown 58 however fofs are infamous as a financial times analysis put it for their extra layers of fees 1 you pay not only for the fund in which you re directly invested but also for those funds where the asset manager places your capital fofs also make investing more obscure with the additional funds allocations a further remove from your reported allocations below we explain how these funds work and walk you through their potential benefits and drawbacks 