Large or small caps? Rest easy with FoFs | Economic Times

Mumbai: Fund of Funds (FoF) may have been around for half a century, but they have registered their presence as a bold investment hedging tool only in the past couple of decades.And their best application is in settings where the investor faces decision dilemmas — on more fronts than one. For instance, where the answer on asset allocation would require introspection, FoF comes in handy. Within an asset class too, say equities, retail investors are unable to decide the amount of large, mid or small cap percentage they should hold in their portfolios. Many are unable to decide whether their international allocation should be to a US-based fund or emerging market fund, or which sectoral theme they should choose.Over the past one year, fund houses have launched new funds or repositioned their old offerings. 81100513Nippon India Flexicap FoF, Mirae Asset Equity Allocator FoF, Axis All Season Debt FoF, and Axis Global Equity Alpha Fund of Fund are some new FoFs launched over the last one year. Motilal Oswal has launched NFO of its Multi Asset Passive Fund of Funds.Global and domestic equities have surged to record highs and valuations are rich, returns from debt are very low and gold is in a consolidation phase. In this backdrop, financial planners believe investors should not be carried away by greed and place a strong emphasis on asset allocation.