---
title: "What is a fund-of-funds (FoF) and is it a good idea?"
description: 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…
url: "https://arafinserv.com/fa/basics-of-mutual-fund-investing/what-is-a-fund-of-funds-fof-and-is-it-a-good-idea/"
updated: "2026-03-25"
category: Basics of Mutual Fund Investing
---

# 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. A retail investor can avoid such schemes. However, an investor with a sizeable portfolio can consider investing a small portion of their portfolio in FoFs to capture multiple themes under a single scheme.