What is a fund-of-funds (FoF) and is it a good idea?

A Fund of Funds invests in other mutual funds rather than investing directly in stocks, bonds or other securities. An FOF Scheme of a primarily invests in the units of another Mutual Fund scheme. It provides diversification across fund managers and strategies but comes with slightly higher costs due to layered expenses. FoFs are generally considered good for small investors looking for a one-stop diversified portfolio.