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How should investors look at Fund of Funds (FOF)

Funds of Funds (FOFs) usually invest in other mutual funds. They may be typically required to invest in mutual funds scheme managed by AMC, or invest across other funds or schemes managed by different fund houses.

A fund of funds (FOF)—is also termed a multi-manager investment tool as it invests in other funds. In other words, the portfolio basically consists of other mutual fund schemes.

How a Fund of Funds Works

The strategy behind FOFs aims to achieve appropriate asset allocation and diversification with different mutual fund categories like debt, equity, gold, etc., that form part of your portfolio.

Key Takeaways for an investor FOFs invest in other mutual fund schemes. Advantages of Investing in Fund of Funds for investors

There are three key benefits of investing in a fund of funds Mutual Fund –

Diversification
Fund of funds may has a portfolio of different asset class or sector, or fund. Thus it acts as a benefit for diversification and amplifies risk- adjusted returns that is optimized due to the portfolio.

Professionally trained managers
Portfolio managers are skilled and qualified individuals that assess and analyze all risk and return factors through detailed investment strategies. This gives investors the benefit of professional management of their investments.

Low resource requirements
It is important for every investor to analyze the particular FOF’s mutual funds schemes or any other category.

Few points to keep in mind as an investor

Stay invested for the long term: Make sure as investors you must lock-in your funds for at least 3 to 5 years to fetch desired returns. Also, ensure that you are able achieve your liquidity needs through debt mutual funds like liquid funds etc. Mostly FOF s in mutual funds follow a long term strategy, thus it is suggested to have a long term approach.
Risk-Reward Payoff: Always remember that Fund of Funds are subject to volatility due to market fluctuations.
Expense ratio
Evaluate the expense ratio of the Fund of Funds scheme.

Tax
Capital Gain Tax levied on a fund of funds is payable by an investor during redemption of the corpus amount.

Thus, Fund of Funds is a convenient option for investors who do not have the time to select the mutual funds for their portfolio.

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How VoIP Solutions Help your Business in Critical Times

Remember King Kong? The chest-beating, helicopter-smacking giant ape which rampages the city of New York for a fair blonde? Can you recall that thrilling climax set on the iconic Empire State Building? Well, be it an ape, aliens or giant sharks, many a time Hollywood made us draw entertainment from the disasters. Imagine you are in that turbulent situation? Forget rescue operations, can you ensure that your company bounces back as early as possible? Do you have a robust backup plan?

In this scenario, your communication system should be tough enough to liberate you from the disaster’s impact and make sure that you deliver the services your clients need immediately. Here is an account of how a cloud-based VoIP Phone Services would bail you out in critical times of all these Hollywood-ish disasters

The King Kong Effect

Imagine Kong is in and around New York City and hell broke loose! Your business area is destroyed to the core and it had a daunting impact on your data center. The cloud-based VoIP hosting services ensure that your calls are re-routed through the other centers in Los Angeles, Chicago, and Dallas or right there from Europe!

The Alien Invasion

Imagine there’s a dark cloud hovering across your city & within no time you realize it’s an Alien Invasion! The cosmic rays are destroying the cities indiscriminately and your office to goes haywire! In that critical situation, VoIP business phone ensures that you won’t miss a call. How do you ask? If any specific location is down, VoIP cloud services detect them instantly and ensure that inbound calls, messages are re-routed to a backup location like your cell number or phone. Need we say more?

The Times of Sharknados

Imagine you witness sharks are tossing from the sky out of the blue, and encircled your office, don’t get panic! The only thing you need to do is go to an area of higher altitude. Should not forget to take your VoIP business phone

You and your entire staff can leave the premises and relocate yourselves to another safe area probably a warehouse where survivors gather. What you all need to do is to plug into the internet. As VoIP phones are configured to work from any virtually high-speed internet connection, you can regain the access to voicemail, extension dialing and other features instantly

The Bottom Line

No matter where and when the disaster strikes, in most of the turbulent times, cloud VoIP provides a robust backup facility and ensures that you never lose the network configurations, and miss all the user extensions, attendant prompts, directories etc. In this unique way, the VoIP business phone maintains the copies of all the critical software elements powering a client’s phone system.

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What is XIRR and how is it used?

We use CAGR when we gauge the mutual funds’ performance. When you gauge the value of your investments, you use XIRR. So if you are doing an SIP every month you will require XIRR to evaluate what money you have made.

How to calculate XIRR?

To calculate XIRR, you will require three essential attributes. Date, Cash Flow and Portfolio Value.

XIRR can be easily calculated using Microsoft Excel. Excel provides an inbuilt function to calculate XIRR.

XIRR formula in excel is:= XIRR (value, dates, guess)

This, will give you your own XIRR. Your money management abilities – adding & withdrawal of investments – are then going to be calculated through your XIRR.

You can use XIRR over time and check how your investments have fared.

Limitations of XIRR

XIRR has certain limitations as it overemphasizes cash flows. For instance, your cash flows may not match the market momentum. If you happen to invest in the month when the market is at low and by the end its peak, then your XIRR will be marginal. Your XIRR will be overshadowed because you added money when the market was high, thus receiving lesser units.

Thus, XIRR is your asset allocation or cash-flow based return. You might need it to see how well your investment has performed.

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