Bet on fund of funds (FoFs) only if it serves a specific purpose
Synopsis
Investors can avoid domestic FoFs as they may not add much value to the existing portfolio. While it makes sense to use the FoF route for global diversification, it is better to avoid very narrow or regional themes.
A flurry of fund of funds (FoF) have been launched in the recent past and the investor has many to choose from. However, here is what every investor should keep in mind. Since FoFs invest in other mutual fund schemes, there arises a duplication of costs. Investors have to bear the expense ratio of the original schemes as well as that of FoFs. For instance, Nippon India Asset Allocator FoF investors have to bear the expense ratio of the FoF