Fund of Funds

A Fund of Funds investment is designed to be a solid base that intends to achieve consistently above average returns over the medium to long-term. It is a diverse way of selecting funds that spread your overall investment - which means that it will invest in a range of funds in different sectors giving a balanced portfolio.

Simply, a Fund of Funds is an investment managed by a team which invests in other funds managed by other managers.

The structureof Fund of Funds allows the Fund Manager to quickly react to changes in economic/market conditions by adjusting the balance of the fund in terms of asset allocation. Instead of having to sell a variety of different holdings the management team can simply adjust the fund make-up by selling a holding of a specific fund.

This flexibility, combined with the expertise brought to bear by the Fund of Funds Managers, means they can quickly alter the asset allocation of the fund to take advantage of potential market rises before they happen, but also defend the fund’s position in times of market volatility. Another added benefit of Fund of Funds is that they also have the ability to invest into other sectors to help boost performance e.g. gold, commodities etc.

A feature which can be used in conjunction with Fund of Funds is a Platform - an administrator that holds all collective investments such as ISA’s, Unit Trusts and OEIC’s in one place yet the underlying funds remain invested in the original holdings. This eases the administrative burden on the investor with all holdings on one statement and also allows them greater fund choice.  

Benefits

• Diversification - spread of assets, sectors, markets, funds and fund managers.
• Active Management - switch quickly between sectors to ensure monies are in the right place at the right time.
• Professional Fund Management - exposure to a number of professional managers.
• Risk - limit risk through diversification and continual monitoring of holdings.
• Tax Benefits - simplified tax returns and no CGT payable on internal transactions.

Taxation

• Income subject to income tax
• Gains subject to capital gains tax

All investment returns are determined by performance, market conditions and overall economic factors which may not be repeated in the future. Therefore, past performance is not necessarily a guide to future returns.

 

 

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