sjóðasjóðir

Sjóðasjóðir, often translated as fund of funds, are investment vehicles that invest in other investment funds rather than directly in individual securities like stocks or bonds. The primary purpose of a sjóðasjóður is to provide diversification and professional management by pooling assets to invest in a carefully selected portfolio of underlying funds. This approach can offer investors access to a wider range of asset classes and strategies than might be achievable through direct investment in single funds.

These funds are managed by professionals who are responsible for selecting the underlying funds, monitoring their performance, and rebalancing the portfolio as needed. The selection process typically involves rigorous due diligence, considering factors such as the investment strategy, performance history, management team, and fees of the target funds. Sjóðasjóðir can offer convenience for investors who wish to diversify across multiple asset classes and fund managers without having to research and manage each individual fund themselves. However, it is important to note that investing in a sjóðasjóður incurs multiple layers of fees, as investors pay the fees of the sjóðasjóður itself, in addition to the fees charged by the underlying funds. This can impact the overall return. Investors should carefully consider the fee structure and investment objectives before investing in a sjóðasjóður.