A fund of funds (FoF) is an investment structure that diversifies by investing in a portfolio of other private equity, venture capital, or hedge funds rather than making direct investments in operating companies. Investors gain exposure to multiple managers, strategies, geographies, and vintages within a single vehicle.
FoFs are particularly useful for smaller institutional investors and family offices that lack the resources to conduct manager due diligence across many funds independently. The trade-off is an additional layer of fees — the FoF's management fee and carry on top of the underlying funds' fees. In Asia-Pacific, FoFs often serve as gateway vehicles for limited partners new to private markets seeking to build diversified exposure.