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Top 10 Domestic and International FoFs: Navigating the Investment Landscape with Diversification and Expertise

08 December 20236 mins read by Angel One
For those looking for instant diversification and convenience, Fund of Funds emerges as an attractive alternative. But what exactly is FoF, let’s find out.
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Understanding Fund of Funds (FoF)

Fund of Funds (FoF), often dubbed the “super fund,” is a distinctive mutual fund category providing investors with a streamlined approach to diversify their investments. Instead of direct engagement with stocks or instruments, investors benefit from a single investment channel into a portfolio of various mutual funds.

How FoF Works

While mutual funds typically invest directly in various securities, FoFs take a unique approach by investing in other mutual funds. Fund managers, in the FoF landscape, can opt for a single fund or multiple funds from different houses, shaping the overall investment strategy. For instance, the ICICI Prudential Debt Management Fund (FOF) exemplifies this by investing in its own mutual funds and those of different fund houses.

Types of Fund of Funds

  1. Asset Allocation Funds: Seeking exposure to multiple asset classes, including equities, debt, and commodities, these FoFs provide extensive diversification, minimizing risk.
  2. Gold Funds: Investing in mutual funds with exposure to gold securities, these funds offer a vehicle to capitalize on gold price movements.
  3. Foreign or International FoFs: Targeting foreign mutual funds, these FoFs offer geographical diversification and potential high yields, especially during bull markets.
  4. Multi-manager Fund of Funds: A prevalent type in India, these FoFs encompass various asset classes managed by different fund managers, optimizing expertise.
  5. Exchange-Traded Fund of Funds: Comprising different exchange-traded funds, these FoFs are favoured for wealth creation and high liquidity.

Advantages of FoFs

  • Diversification: FoFs, by investing in multiple mutual funds, provide multi-dimensional diversification, safeguarding against economic and political turmoil.
  • Trained Managers: Professional fund managers leverage their expertise to make strategic investment decisions aligned with investors’ goals, aiming to outperform indexes.
  • Risk Alleviation: FoFs, often incorporating debt and G-sec funds, exhibit lower volatility, mitigating risks associated with equities.
  • Low Resource Requirement: Fund managers handle extensive research, making FoFs accessible to investors with limited financial resources.

Disadvantages of FoFs

  • Expense Ratio: Investing in other funds incurs multiple layers of administration costs, making FoFs relatively expensive.
  • Tax Implications: Treated as non-equity funds, FoFs face taxation challenges even if investing in equity-oriented schemes.
  • Overlap of Holdings: Investing in multiple funds increases the risk of having identical securities, impacting the portfolio with small fluctuations.

The tables below present the leading 10 Fund of Funds (FoFs) both internationally and domestically, ranked by Returns Over 1 Year. Key information includes Assets Under Management (AUM), Fund Manager details, Net Asset Value (NAV), Expense Ratios, Standard Deviation, and Sharpe Ratios, offering investors comprehensive insights into the performance and management of these top-performing FoFs.

Top 10 Domestic FOF:

Sr No Funds Fund Manager AUM (Rs crore) NAV 52 WeekHigh (NAV) 52 WeekLow (NAV)
1 ICICI Pru Bharat 22 FOF-(G) Kayzad Eghlim 321 25.19 25.19 16.3
2 ICICI Pru Nifty Alpha Low – Volatility 30 ETF FOF(G) Kayzad Eghlim 265 12.37 12.37 9.11
3 ICICI Pru India Equity (FOF)(G) Dharmesh Kakkad 79 22.75 22.75 16.96
4 Nippon India Asset Allocator FoF-Reg(G) Sushil Budhia 184.3 16.4 16.4 12.82
5 Mirae Asset Nifty India Manufacturing ETF FoF-Reg(G) Ekta Gala 53.3 13.37 13.37 9.87
6 Tata Nifty India Digital ETF FoF-Reg(G) Meeta Shetty 38.3 11.13 11.18 8.11
7 ICICI Pru Passive Strategy Fund(FOF)(G) Sankaran Naren 118.3 128.05 128.05 98.98
8 ICICI Pru Thematic Advantage Fund(FOF)(G) Sankaran Naren 1,269.80 167.43 167.43 130.59
9 HDFC Dynamic PE Ratio FOF-Reg(G) Srinivasan Ramamurthy 39.8 34.25 34.25 27.89
10 Aditya Birla SL Multi-Index FoF-Reg(G) Vinod Narayan Bhat 9.1 12.25 12.25 9.88

Top 10 Overseas FOF:

Sr No Funds Fund Manager AUM (Rs crore) NAV 52 WeekHigh (NAV) 52 WeekLow (NAV)
1 Mirae Asset NYSE FANG+ETF FoF-Reg(G) Ekta Gala 995.9 14.37 14.57 7.7
2 Edelweiss US Technology Equity FOF-Reg(G) Bhavesh Jain 2016.6 19.13 19.21 12.09
3 Mirae Asset Global X Artificial Intelligence & Technology ETF FoF-Reg(G) Siddharth Srivastava 174.8 14.39 14.65 9.55
4 Motilal Oswal Nasdaq 100 FOF-Reg(G) Swapnil P Mayekar 3813 26.94 27.24 18.21
5 Navi NASDAQ 100 FoF-Reg(G) Aditya Mulki 670.8 11.65 11.83 7.83
6 Kotak NASDAQ 100 FoF-Reg(G) Arjun Khanna 2387.9 13.27 13.41 8.96
7 Aditya Birla SL NASDAQ 100 FOF-Reg(G) Dhaval Joshi 278.3 10.79 10.9 7.31
8 Invesco India – Invesco EQQQ NASDAQ-100 ETF FoF-Reg(G) Amit Nigam 304.4 12.35 12.45 8.37
9 Axis NASDAQ 100 FoF-Reg(G) Vinayak Jayanath 115.7 14.1 14.24 9.64
10 DSP Global Innovation FoF-Reg(G) Jay Kothari 539 11.31 11.46 7.93

In conclusion, the Fund of Funds landscape emerges as a powerful tool for investors seeking diversification and multi-manager exposure. While tax considerations add a layer of complexity, the benefits of risk mitigation and portfolio optimization make FoFs a compelling option in the ever-evolving financial landscape.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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