Which of the following statements is true when comparing fund of funds to traditional mutual funds?
A.
Fund of funds have higher fees than traditional mutual funds since there are two sets of management fees.
B.
Fund of funds have more asset class options available and lower fees than traditional mutual funds.
C.
Since fund of funds invest primarily outside Canada, they will have higher fees than traditional mutual funds.
D.
Fund of funds have more fee structure options available and lower fees than traditional mutual funds.
The Answer Is:
A
This question includes an explanation.
Explanation:
A fund of funds is a mutual fund that invests in other mutual funds. This means that there are two levels of management fees: one for the fund of funds itself and one for the underlying funds. Therefore, fund of funds have higher fees than traditional mutual funds that invest directly in securities.
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