What Is An Equity FOF? Things To Consider Before Investing

Investing in mutual funds is not a complex process anymore. One can invest either through an offline branch of the AMC or they can even do it online by simply visiting the AMC’s website. All you have to do is create a user account, complete all the one-time mandate KYC formalities and you can start investing in mutual funds from the comfort of your home or office. However, some investors find it difficult to determine which mutual fund scheme is ideal for them. 

If you are someone who wishes to invest in a fund that invests in other mutual funds, you may consider Fund of Funds (FOFs). Let us understand what FOFs are and things you should consider before investing. 

Understanding Fund of Funds

A Fund of Fund is a mutual fund scheme that buys units of another mutual fund, sometimes multiple funds. It is a mutual fund that simply invests in other mutual funds to achieve its investment objective. Instead of directly investing in equity or debt related securities, the fund manager instead builds a portfolio comprising of other mutual funds. This portfolio is built keeping in mind the investment objective and the risk profile of the FOF. Those who invest in FOF schemes not only get diversification across securities but also across multiple diversified mutual fund portfolios. 

Where does Fund of Funds invest?

A FOF scheme may invest in equity or bonds. It may also invest in international markets through investments in international mutual funds. Depending on their investment objective, investors may choose to either invest in domestic or international FOFs. The investment objective of the FOF scheme is to generate capital appreciation over the long term. 

What is an Equity ETF FOF?

First, we will discuss ETFs. Also referred to as exchange traded funds, an ETF is an open ended scheme that invests the majority of its investible corpus in the underlying securities of the benchmark/index that it is tracking. 

Axis Equity ETFs FoF Regular Growth
An open ended fund of fund scheme predominantly investing in units of domestic equity ETFs

Investment objective
To provide long-term capital appreciation from a portfolio investing predominantly in units of domestic equity ETFs. There is no assurance that the investment objective of the Scheme will be realized. However, there can be no assurance that the investment objective of the Scheme will be realized.

Liquidity
 The Scheme offers Units for Subscription and Redemption at NAV based prices on all Business Days on an ongoing basis, commencing not later than 5 business days from the date of allotment. Under normal circumstances the AMC shall dispatch the redemption proceeds within 10 business days from the date of receipt of request from the Unit holder.

Benchmark 
NIFTY 500 TRI

 Plans and Options
 Plans and Options under the Scheme: 

Plans Axis Equity ETFs FoF - Regular Plan
 Axis Equity ETFs FoF - Direct Plan
 Direct Plan

Direct Plan is only for investors who purchase /subscribe Units in a Scheme directly with the Fund and is not available for investors who route their investments through a Distributor.

Regular Plan 
Regular Plan is available for investors who purchase/ subscribe Units in a scheme through a Distributor. All the plans will have a common portfolio. 

Options under each Plans
 Each plan offers the following options:
•    Growth option 
•    Income Distribution cum Capital Withdrawal (IDCW) Option – IDCW Payout and IDCW Reinvestment facility

Load Structure 

Entry Load: Not Applicable 
Exit Load: If redeemed / switched-out within 15 days from the date of allotment – 1% If redeemed/switched out after 15 days from the date of allotment – Nil

Eligible investors / modes for applying 
All categories of investors (whether existing or new Unitholders) as permitted under the Scheme Information Document of the Scheme are eligible to subscribe under Direct Plan. Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund {except Platform(s) where investors’ applications for subscription of units are routed through Distributors}.

Standard Risk Factors
•    Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal.
•    As the price / value / interest rates of the securities in which the Scheme invests fluctuates, the value of your investment in the Scheme may go up or down. 
•    Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the Scheme. 
•     Axis Equity ETFs FoF is the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and returns.
•    The sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the initial contribution of Rs. 1 lakh made by it towards setting up the Fund. 
•    Axis Equity ETFs FoF is not a guaranteed or assured return scheme.
To understand all the risks associated with this investment scheme, please refer to the Scheme Information Document (SID)

Axis Equity ETFs FoF Regular Growth
An open ended fund of fund scheme predominantly investing in units of domestic equity ETFs

 
Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
 Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.