An investment fund that invests in other investment funds rather than investing in stocks, bonds or other securities directly. Fund of funds are managed by mutual funds, hedge funds, private equity funds, and investments trusts, each with a different investment strategy. From the point of view of an investor in a fund of funds, the advantage of this type of investment is that it involves a significant amount of diversification because the fund of funds only invests in other funds which themselves are required to ensure that their investment portfolios are not overly concentrated in a small number of asset classes or have too much exposure to a limited number of underlying obligors.