Updated Apr 11, 2021 | 12:05 IST
Since FoFs invest in other mutual fund schemes, investors pay fund management charges for both the underlying funds and the FoF itself. Representational image
New Delhi: Of late many fund houses have launched domestic fund of funds (FoF). But unlike international FoFs the utility of domestic FoFs is not much unless it serves a specific purpose. Investors should take into account the following points before investing in a domestic FoF.
1) High cost: Since FoFs invest in other mutual fund schemes, investors pay fund management charges for both the underlying funds and the FoF itself. For example, in Nippon India Asset Allocator FoF, investors have to pay the expense ratio of the FoF, which is 0.19% and the weighted average expense ratio of its underlying funds Nippon India Small Cap Fund, Nippon India Growth Fund and Nippon India Large Cap Fund- that charge between 1.06% to 1.26% fee per annum. Financial planners say on