Characteristics of Fund of Funds
Fund of funds has the below characteristics
- It builds Portfolio of uncorrelated hedge funds across the world.
- Raise funds from different investors around the world and mainly invest in different hedge funds. But sometime they invest in other funds like mutual funds, private equity funds etc. as well.
- The main aim to provide stable return over the years which is more than the market index return.
- Has low risk as invests in different hedge funds which helps to diversify the risk significantly.
- With more diversification, it reduces the volatility also.
- Preferred investment choice for pension funds, endowment funds, corporate funds and high net worth individuals with moderate risk profile.
- Requires a small minimum amount for investment.