The latest development in the exchange traded fund (ETF) industry has been the so-called “fund of funds.”
It is actually a mutual fund that is made up of ETFs, thus the name. This idea is still in its infancy, so enhancements, growth and revisions will be common over the next few years, reports Paul Justice for Ignites. The so-called “manager selection” is not a topic that is of importance within a fund of funds.
In a nutshell, most of these products are a re-packaging of already available products, designed more for convenience for individual investors. The fees on these types of funds are simply not affordable for the individual investor, making some of these in efficient.
To succeed, these funds need to keep the low cost associated with an ETF stable within a fund of funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.