Fund of Funds
A fund that is designed to hold other investment funds within one structure to allow investment in several different unit trusts or funds. The fund of funds manager will select different funds from various providers who have expertise in different geographical areas and sectors and mange the portfolio as one fund, giving the private investor access to ‘best of breed' within one structure.
In an investment and financial planning context, funds are generally ‘collective investments'. That is to say that an individual's money is ‘pooled' with those of many other investors to invest across a wide range of shares or other investment media thus giving a spread of risk that would normally be unobtainable to one individual.
Examples of commonly used funds in the UK would be Unit Trusts; Open-Ended Investment Companies (OEICS); Investment Trusts, Life Funds and Pension Funds.