Domestic equity Fund of Funds (FoF)

Mon, 18 May 2026 00:00:00 +0000

A domestic equity Fund of Funds (FoF) is a mutual fund scheme that invests in other Indian equity mutual fund schemes rather than directly in stocks. The category sits within the Fund of Funds framework under SEBI regulations. Domestic equity FoFs are typically used for:

Asset allocation: Combining equity exposure across multiple managers and styles.
Multi-AMC diversification: Spreading exposure across different AMCs.
Single-instrument convenience: For investors wanting one-fund equity allocation.

For Indian retail investors, the trade-off is the double-TER structure: FoF-level TER plus underlying-scheme TER, combined with the equity-vs-debt tax treatment depending on the FoF’s domestic-equity concentration.

Taxation of Fund of Funds (revised 2024)

Tue, 12 May 2026 00:00:00 +0000

Taxation of Fund of Funds (FoFs) in India was revised by the Finance Act 2024, effective 23 July 2024, to create a favourable classification for domestic equity FoFs that invest predominantly in equity-oriented domestic mutual funds. Under the pre-2024 framework, all FoFs – regardless of whether they invested in equity or debt underlying funds – were classified as non-equity and taxed either under Section 112 (LTCG with indexation, pre-April 2023) or as specified mutual funds at slab rate (post-April 2023, per Finance Act 2023). The Finance Act 2024 introduced a new sub-category: a domestic equity FoF that invests at least 90% of its assets in equity-oriented domestic mutual funds now qualifies as equity-oriented and is taxed under Sections 111A and 112A like a direct equity mutual fund.

Domestic Equity FoF on WebNotes

Domestic equity Fund of Funds (FoF)

Taxation of Fund of Funds (revised 2024)