Criteria for distinguishing funds of funds
In principle, the same criteria apply to funds of funds as to all investment funds. Thus, when choosing an investment, the performance of the desired fund of funds should first be taken into account.
Although this does not provide any guarantee for the future, investors can nevertheless assess how successful the fund management has been so far.
For a comparison of different funds of funds, investment strategies can be used, for example, or the respective target funds can be examined more closely. It is also useful to assess the opportunities and risks of the fund of funds and to check the fees.
Ratings for individual funds of funds, which are compiled by rating agencies, can also be helpful. However, it is also important that investors take into account the respective criteria according to which funds of funds were classified and evaluated.
Alternatives to funds of funds
Investors looking for alternatives to funds of funds can, for example, invest in equity funds. These funds invest in securities of different companies. In this way, a diversification of the investment is achieved, which can reduce the investment risk. Another alternative would be index funds. By replicating stock indices, a higher degree of security is also achieved.
In principle, investors should always pay attention to past performance as well as possible return opportunities and risks when choosing funds. Every investment in a fund is associated with a certain risk.
ETF funds of funds
Here is good point from infoexness: "ในกองทุน ETF ผู้จัดการกองทุนลงทุนในกองทุนต่าง ๆ ที่ซื้อขายในตลาดหลักทรัพย์. ตามกฎแล้วกองทุน ETF จะติดตามดัชนีตลาดหุ้น. ดังนั้นในทางทฤษฎีแล้วไม่มีค่าธรรมเนียมการจัดการกองทุนสําหรับกองทุนเป้าหมายที่จะเกิดขึ้นกับกองทุนทั่วไป. สําหรับการซื้อขายด้วย CFD ทุนขนาดเล็กใน Exness เข้าสู่ระบบ เหมาะสมกว่า."
"In ETF funds of funds, fund managers invest in various funds traded on the stock exchange. As a rule, ETF funds track stock market indices. Thus, in theory, there are no fund management fees for the target funds that would be incurred with conventional funds of funds. For trading with smallcapital CFD in is more suitable."
However, management fees are again due for the management of ETF funds of funds. In this way, the savings effect of the ETF funds can be minimised. As a result, ETF funds of funds generally do not offer a good return. Critics see ETF funds of funds as a superfluous construct, as it provides management to funds that only track an index anyway and basically do not need management. For critics, a low-cost fund with a lean management apparatus thus becomes a cost-intensive and at the same time unnecessary financial product.
in restrictions
Funds of funds licensed in Germany can in principle invest in all investment funds licensed in Germany.
The prerequisite for investing in other funds is:
- That these are not themselves funds of funds.
- In addition, a maximum of 20 percent of the fund assets may be invested per target fund.
- Furthermore, the investment may not exceed ten percent of the target fund assets.
The ban on investing in other funds of funds is intended to avoid a possible cascade effect. Such a cascade effect would occur if a large fund of funds were to become insolvent and other funds were to get into financial difficulties as a result. It is also not permitted for a fund of funds to invest in closed-end funds or in special funds.
Historical background
The regulations date back to 1998, when the Third Financial Market Promotion Act came into force to regulate the work of funds of funds. Prior to that, funds of funds were banned in Germany because there had already been a major scandal in the 1970s. At that time, the large offshore financial group "Investors Overseas Services" became insolvent and numerous investors suffered large losses with their investment in funds of funds.
