Tuesday, July 15, 2008
Fund of Funds
Fund of Funds are not perfect though, they come with their own unique drawbacks. The first to come to mind is the double layer of fees. When dealing with FoF, an investor must understand that the underlying funds charge a fee, as well as the Fund of Funds manager. This translates to “layers” of fees before the investor receives dollar one. Transparency issues are also important. Research such as the individual manager’s background and reputation, the nature of the investments that they are utilizing, and more are all issues a fund of fund manager must investigate. Therefore, you are relying on the FoF manager’s talent and expertise in choosing managers, when investing.