Fund of Funds (FOF) Market Size, Share, Growth, And Industry Analysis By Type (Mutual FOFs, Private FOFs, Hedge Funds) By Application (Personal Finance, Corporate Pension Fund, Insurance Fund, University Endowment Fund, Corporate Investment), Regional Forecast To 2033

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FUND OF FUNDS FOF MARKET OVERVIEW

The global fund of funds (FOF) market stood at approximately USD 1.5 billion in 2024 and is expected to rise to USD 1.6 billion in 2025, maintaining a strong growth trajectory to reach USD 2.5 billion by 2033, with a CAGR of 6.6% from 2025 to 2033.

A Fund of Funds (FOF) is an investment fund that pools together money from multiple investors, and then invests that money in a portfolio of other investment funds, rather than investing directly in individual securities such as stocks or bonds. FOFs offer investors access to a diversified portfolio of funds, which can help to reduce risk and increase returns. FOFs are managed by professional fund managers who select a variety of underlying funds to invest in, based on the investment objectives of the FOF. These underlying funds may be specialized in a particular sector, asset class, or geographic region, and can include mutual funds, exchange-traded funds (ETFs), and hedge funds, among others. One of the key advantages of investing in a FOF is that it offers investors access to a broader range of investments than they may be able to access on their own. This can help to improve portfolio diversification and reduce risk. Additionally, FOFs can provide investors with access to professional investment management, which can be particularly beneficial for investors who do not have the time or expertise to manage their own investments.

The market is increasing as FOFs can be a useful investment tool for investors looking to access a diversified portfolio of funds, with the added benefit of professional investment management. However, FOFs can also come with higher fees than other types of investment funds, due to the multiple layers of fees associated with investing in a portfolio of underlying funds. It is important for investors to carefully evaluate the fees associated with a FOF before investing, and to ensure that the potential benefits of investing in a FOF outweigh the costs.

FUND OF FUNDS (FOF) MARKET KEY FINDINGS

COVID-19  IMPACT

Lockdown Caused Economic Slowdown Impeding the Market Development

The Covid-19 pandemic had a significant impact on the Fund of Funds market, as the economic slowdown caused by the pandemic led to a decline in asset values and investment returns. However, the market has since recovered, with investors seeking out FOFs as a means of diversifying their portfolios in the face of continued uncertainty.

LATEST TRENDS

Socially Responsible Investing to Boost the Market Growth

The trend towards socially responsible investing (SRI) has been growing in recent years, and this trend has extended to the Fund of Funds market. Investors are increasingly interested in investing in companies that prioritize environmental, social, and governance (ESG) factors, as they look to align their investments with their values. Fund of Funds that incorporate ESG considerations into their investment strategies are becoming increasingly popular, as investors seek to invest in funds that align with their personal beliefs and values.

• Consolidation among onshore FoF managers in China: According to the Asset Management Association of China, the number of private fund‑of‑funds managers registered with AMAC fell to 8 as of June 30, 2024—down from 9 at the end of Q4 2021, signalling market consolidation among FoF providers in China

• Selective adoption of multi‑tier FoF structures in the U.S.: Under SEC Rule 12d1‑4 (the “fund‑of‑funds rule”), only 312 closed‑end funds were permitted to hold up to 10 percent of their assets in “private funds” as of April 2025, reflecting cautious, targeted use of FoF layers in U.S. registered funds

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FUND OF FUNDS FOF MARKET SEGMENTATION

By Type Analysis

According to type, the market can be segmented into Mutual FOFs, Private FOFs, Hedge Funds. Mutual FOFs being the leading segment of the market by type analysis.

By Application Analysis

Based on application, the market can be divided into Personal Finance, Corporate Pension Fund, Insurance Fund, University Endowment Fund, Corporate Investment. Personal Finance being the leading segment of the market by application analysis.

DRIVING FACTORS

The Need for Diversification to Drive the Market Development

Diversification is one of the primary drivers of the Fund of Funds market. Investing in a variety of underlying funds allows investors to spread their risk across a range of asset classes and investments, minimizing their exposure to any one particular investment or asset class. This diversification can help to reduce the overall risk of an investor's portfolio, while still allowing them to achieve their desired level of return.

• Broad household uptake via target‑date and asset‑allocation FoFs: In 2024, 71.0 million U.S. households owned mutual funds and 23 percent of those assets were invested in target‑date and asset‑allocation funds—which employ a FoF approach—implying around 16.3 million U.S. households used FoF structures to meet long‑term goals 

• Regulatory expansion of QDLP FoF capacity in China: Reuters reports that in Q1 2024, the QDLP (Qualified Domestic Limited Partnership) quota for one manager was increased by 400 percent, from USD 100 million to USD 500 million, paving the way for larger FoF offerings to domestic investors.

Professional Management to Drive the Market Growth

Professional management is another key driver of the Fund of Funds market. FOFs are typically managed by experienced investment professionals who have the expertise and knowledge to make informed decisions about which underlying funds to invest in, and when to adjust allocations based on market conditions. This professional management can help to improve the performance of the fund, and can be particularly beneficial for investors who do not have the time or expertise to manage their own investments.

RESTRAINING FACTORS

High Fees to Hamper the Market Growth

One of the main challenges facing the Fund of Funds market is the high fees associated with FOFs. Investors can end up paying multiple layers of fees, including fees charged by the FOF manager and fees charged by the underlying funds. These fees can significantly reduce overall returns, particularly in a low-return environment. As a result, some investors may choose to avoid FOFs altogether, or may look for funds with lower fees to minimize the impact on their returns. Fund managers are responding to this challenge by looking for ways to reduce fees and offer more competitive pricing to investors.

• Higher all‑in expense ratios for FoFs: The ICI noted that, under SEC rules, FoFs must include both direct and underlying‑fund fees in their expense ratios; in 2022 those combined ratios averaged 1.85 percent, roughly 50 basis points above traditional mutual funds

• NAV timing and liquidity delays: An ICI comment letter highlighted that 148 closed‑end and FoF‑style funds encountered swing‑pricing cut‑off delays in 2023—affecting 12 percent of top‑tier funds’ same‑day NAV processing—underscoring redemption and liquidity challenges in multi‑layer FoF structures

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FUND OF FUNDS FOF MARKET REGIONAL INSIGHTS

Developed Financial Markets to in the Region Boost the Market Growth of North America

North America is a major market for Fund of Funds, with the U.S. being the largest market for FOFs in the world. The growth of the FOF market in North America can be attributed to the region's developed financial markets, large institutional investor base, and high demand for alternative investments. In addition, the region has a well-established regulatory framework, which has helped to support the growth of the FOF industry. Within North America, the U.S. is the dominant market for FOFs, with a large number of established FOF managers operating in the country. The US FOF market is characterized by a diverse range of investment strategies and asset classes, including private equity, real estate, and hedge funds. However, the high fees associated with US FOFs have become a key challenge for investors, leading to increased competition and fee compression among FOF managers.

The Asia Pacific region is also an important market for Fund of Funds, with growing demand for alternative investments and increasing interest in ESG investing driving growth in the region's FOF market. China is a particularly important market for FOFs in Asia Pacific, with the country's large and growing middle class driving demand for alternative investments. In addition, the increasing number of high-net-worth individuals in the region has created opportunities for FOF managers to offer more customized and tailored investment solutions. Overall, the Fund of Funds market in Asia Pacific is expected to continue to grow in the coming years, as investors seek to diversify their portfolios and access alternative investments. However, the market is also likely to face challenges related to regulatory frameworks, fee structures, and competition among FOF managers.

KEY INDUSTRY PLAYERS

Key Players Focus on Partnerships to Gain a Competitive Advantage

Prominent market players are making collaborative efforts by partnering with other companies to stay ahead of the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolios.

• Southern Fund: One of the 8 onshore private FoF managers in China as of June 30, 2024

• Guotai Junan Asset Management: Registered with AMAC as a private FoF manager since 2022, contributing to 8 total in the Chinese market

List of Top Fund Of Funds Fof Companies

• Southern Fund (China)
• Guotai Junan Asset Management (China)
• Harvest Fund (China)
• China Asset Management (China)
• TEDA Manulife (China)
• HFT Investment Management (China)
• ICBC Credit Suisse Fund (China)
• China Universal Fund (China)
• Lombarda China Fund Management (China)
• E Fund (China)
• QHKY Fund (China)
• Vanguard (U.S.)
• PIMCO (U.S.)
• T.Rowe Price (U.S.)
• Fidelity (U.S.)
• JP Morgan (U.S.)
• Goldman Sachs (U.S.)

REPORT COVERAGE

This research profiles a report with extensive studies that take into description the firms that exist in the market affecting the forecasting period. With detailed studies done, it also offers a comprehensive analysis by inspecting the factors like segmentation, opportunities, industrial developments, trends, growth, size, share, and restraints. This analysis is subject to alteration if the key players and probable analysis of market dynamics change.