A "manager of managers fund" (MoM fund) is an

investment fund An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages in ...

that uses an

investment strategy In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics a ...

of directly selecting different investment managers and gives them mandate to make investment decisions. This is different from the traditional

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV ...

where only one manager invests the fund capital in stock,

bond (finance) In finance, a bond is a type of security under which the issuer ( debtor) owes the holder ( creditor) a debt, and is obliged – depending on the terms – to repay the principal (i.e. amount borrowed) of the bond at the maturity date as well a ...

or other investment vehicles. MoM fund is one type of

multi-manager investment Multi-manager investment is an investment product that consists of multiple specialized funds. Each specialized fund may invest across different sectors and markets, or having managers investing in the same asset class but have different investme ...

. The other type is

fund of funds A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A ...

. The assumption underpinning MoM is that diversification and balance can be achieved more readily by having a group of specialists, instead of one individual, investing the fund's capital. This means that the role of the manager of managers is to assemble a group of investment experts, closely monitor their performance, and alter the composition of the team to adapt to market conditions or fund performance. For example, the manager of a large pension fund would appoint different investment managers for different asset classes such as equities (stocks), bonds, and commodities. The performance of those managers will then be measured against their respective benchmarks, replacing as necessary to maintain the fund’s overall performance and risk control measures.

See also