FoFs are emerging as an important mode of investment. One of the biggest advantage that this category brings on the table is tax efficiency. With the increase in the no. of mutual funds and the schemes nowadays, investors too hold multiple schemes in their portfolio. The challenge is when you want to switch from one scheme to another - tax is a huge cost. FoFs solve that problem to a substantial extent. However, each FoF would have a different objective and strategy; so do consult your advisor before investing.
Here is a broad understanding.
