Investors (LPs)
What is Fund of Funds (FoF)?
A fund of funds (FoF) is a fund that invests in other funds rather than directly in companies or assets. It offers LPs diversified access to many managers through a single commitment.
A fund of funds pools investor capital and allocates it across a portfolio of underlying private funds (e.g., venture or private equity funds). It gives smaller or less-resourced LPs instant diversification and access to managers they might not reach directly.
The trade-off is an extra layer of fees — the FoF charges its own fee on top of the underlying funds’ fees.
Also known as: FoF, fund-of-funds