Asset Allocation Fund

Finance a la shmoop what is a fund of funds? all right well first there's a

fund it has say a hundred stocks in it you know index fund, mutual fund,

exchange-traded fund or ETF but then there's a fund of funds not just a fund

of stocks but a fund of funds like if there was a fund of funds that comprise [Computer screens with graphs appear]

ten funds and each fund had a hundred stocks in it while then that fund of

funds would be representing the performance of a thousand stocks lots

and lots of stocks and stocks because Amazon ships a lot of box and box it's [Man wearing Dr Seuss hat discussing amazon boxes]

from dr. Seuss we got that for no charge notionally a fund of funds appeals to

investors because well they can grow very large the fund of funds can not the

investor when they're eating a lot because they're nervous in stock market

I do that and then directly negotiate with money managers to give what is

essentially a wholesale volume discount to shareholders of fund to funds thingies

well if fund of funds comes to a hedge fund that normally charges a 2% management

fee and takes 20% of profits well if that fund is investing a big chunk of [Lots of cash appears on a table]

that fund say 50 million bucks well maybe they can negotiate for one and a

half percent management fee in just 15% carry or something like that well it's

not always doable but that's the tacit promise of the fund of funds people who

knock on the doors of the wealthy asking for one percent a year for themselves [Fund of fund manager knocks on door and man opens door]

for their own management fees on top of what the hedge mutual and while other

funds want to charge theoretically there could also be a fund to fund to fund of funds

but that's just a little too inception for us you know so just watch

the fees if they they add up fund of funds can be fun....