Fund of funds
A fund of funds is an investment vehicle whose holdings consist of shares in hedge funds and/or private-equity funds. Some of these multi-manager vehicles limit their holdings to specific managers or investment strategies; others are more diversified. Investors in funds of funds are willing to pay two sets of fees, one to the fund-of-funds manager and another set of (usually higher) fees to the managers of the underlying funds.
"Funds of hedge funds" are a relatively new type of investment product. Some, but not all, register with the SEC and file semi-annual reports. They tend to have lower minimum investment thresholds than traditional unregistered hedge funds and can sell their shares to a larger number of investors. Funds of hedge funds are not mutual funds. They offer very limited rights of redemption. And, unlike ETFs, their shares are not typically listed on an exchange.
- "Hedge Fund Glossary ”. Hedge Fund Lounge.