n NISM Certifications
NSM General NISM
Medium

What is a characteristic feature of Fund of Funds (FoF)?

Practice question from C3 - Test Your Knowledge — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Invests directly in equity shares of companies

  2. Invests in units of other mutual funds for diversification

    Correct answer

  3. C

    Tracks a specific stock market index

  4. D

    Only invests in debt securities

Why this is the answer

FoFs invest in multiple mutual fund schemes to benefit from diversification across asset managers and schemes.

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