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Ch.2 · Advantages and Limitations of Mutual Funds · medium

What is a Fund of Funds (FoF)?

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EXPLANATION

A Fund of Funds (FoF) invests in units of other mutual fund schemes rather than directly in stocks or bonds. It provides an additional layer of diversification. Domestic FoFs investing less than 65% in equity-oriented schemes are taxed as debt funds.

A.A fund that pools money from multiple AMCs into one scheme

B.A mutual fund that invests in units of other mutual fund schemes rather than directly in securities [✓ Correct]

C.A fund that combines features of equity and debt mutual funds

D.A fund that invests in both domestic and international mutual funds through SEBI approval

EXPLANATION

A Fund of Funds (FoF) invests in units of other mutual fund schemes rather than directly in stocks or bonds. It provides an additional layer of diversification. Domestic FoFs investing less than 65% in equity-oriented schemes are taxed as debt funds.

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