Fund of funds

An investment vehicle where a fund invests in a portfolio composed of shares of other funds rather than investing directly in stocks, bonds, or other securities. The strategy of investing in a fund of funds aims to achieve broad diversification and asset allocation where investors can get broader exposure with reduced risks compared to investing directly in securities. A fund of funds, also referred to as a multi-manager investment, gives small investors broad diversification to hopefully protect their investments from severe losses caused by uncontrollable factors such as inflation and counterparty default.