A "funds" ( FOF ) is an investment strategy holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investment is often referred to as a multi-manager investment. Funds may be "shackled," meaning that it only invests in funds managed by the same investment firm, or "unfettered", which means it can invest in external funds run by other managers.
There are different types of FOF, each investing in a different type of collective investment scheme (usually one type per FOF), eg FOF mutual fund, FOF hedge fund, private equity FOF, or FOF investment trust. The original Fund Fund was created by Bernie Cornfeld in 1962. The company went bankrupt after being plundered by Robert Vesco.
Video Fund of funds
Features
Investing in collective investment schemes can increase diversity compared to smaller investors holding fewer securities directly. Investing in funding can achieve greater diversification. According to modern portfolio theory, the benefits of diversification can be the reduction of volatility while maintaining average returns. However, this is denied by an increase in fees paid at both the FOF level and at the level of underlying investment funds.
Maps Fund of funds
Considerations
Management fees for FOFs are usually higher than traditional investment funds because they include the management fees charged by the underlying fund.
Pension funds, endowments, and other institutions often invest in hedge funds for some or all of their "alternative asset" programs, that is, investments other than traditional stock and bond holdings.
After the allocation of the level of fees paid and taxation, the return on FOF investment will generally be lower than what a single manager's fund can generate.
The due diligence and security of investment in FOFs has been questioned as a result of the Bernie Madoff scandal, in which many FOFs incorporate major investments into the scheme. It becomes clear that the motivation for this is the lack of cost by Madoff, which gives the illusion that FOF performs well. The due diligence of FOFs does not seem to include asking why Madoff did not make this fee for his services. 2008 and 2009 saw the FOFs take a beating from investors and the media on all fronts of the empty promises made by marketers who were too eager for the strength (or lack of) of their carefully explained due diligence process and the additional cost layer that really, completely justified, all culminating in the failure of Bernie Madoff.
These strategic and structural issues have caused the funds to become increasingly unpopular. However, fund-for-funds remain important in certain asset classes, including venture capital and for certain investors so that they can diversify their assets too low or too high under management appropriately.
Asset allocation
The FOF structure may be useful for asset allocation funds, ie, "exchange-traded funds (ETF) from ETFs" or "mutual fund mutual funds". For example, iShares has an asset allocation eTF, which has other ETF iShares. Similarly, Vanguard has an asset allocation mutual fund, which owns other Vanguard mutual funds. "Parent" funds may have the same "child" fund, with different proportions to allow "aggressive" allocations to "conservatives." This structure simplifies management by separating allocations from security elections.
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Target-date funds are similar to asset allocation funds, except that allocations are designed to change over time. The same structure is useful here. iShares has a target-date ETF that has other ETF iShares; Vanguard has a target-date mutual fund that has other Vanguard mutual funds. In both cases, the same funds are used as asset allocation funds. Because the provider may have many target dates, this can greatly reduce duplicate work.
Private equity funds
According to Preqin (formerly known as Private Equity Intelligence), in 2006, funds were invested in other private equity funds (ie FOF, including secondary funds) of 14% of total capital agreed on private equity markets. The following ratings of FOF private equity investment managers are based on information published by Private Equity Intelligence:
Source: Preqin (formerly known as Private Equity Intelligence)
According to the Global Private Equity Report of Praqin 2011, the largest companies with total FOF capital collected in the last ten years ($ bn) are:
Sumber: Preqin
Dana hedge fund
A hedge fund is a fund that invests in different hedge fund portfolios to provide broad exposure to the hedge fund industry and to diversify the risks associated with a single investment fund. Hedge funds choose hedge fund managers and build portfolios based on those options. Hedge funds are responsible for hiring and firing managers in the fund. Some funds from a hedge fund may only have one hedge fund in it, allowing ordinary investors to become highly acclaimed funds, or hedge funds.
Hedge funds generally charge fees for their services, always in addition to management fees and hedge fund performance, which can be 1.5% and 15-30%, respectively. Costs can reduce investor profits and potentially reduce total returns below what can be achieved through cheaper mutual funds or exchange-traded funds (ETFs).
Venture capital fund
Venture capital funds funds are funds that invest in different portfolios of venture capital funds for access to private equity markets. The client is usually a university endowment fund and a pension fund.
See also
- Collective investment scheme
- Investment management
- Fund manager manager
- Bernard Cornfeld, operator may be the first "Fund of Funds" from 1962 until its collapse in 1970. [1].
References
Source of the article : Wikipedia
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