The average performance of fund of funds in many sectors is typically greater than the average for non-funds of funds. For example, in the IMA global growth sector, the average unfettered fund-of-funds returned 2.07 per cent more than the average of all other funds in the same sector over the 12 months ended June 30, 3.74 per cent more for the year before and the winning sequence goes back as far as the 12 months ended 30 June 2000. They do typically outperform on average (is the long answer.)Do funds of funds provide value? The performance statistics are after all charges so whatever your views about the charges levied by Fofs, the logical conclusion is that on average Fofs in the IMA global growth sector could have raised their fees by 2 per cent in the 12 months ended June 30 and still justified their fees. Too much debate is given to the subject of total expense ratios for Fofs without looking at the benefits investors get for the added layer of fees. Let us look at the benefits for the 75 basis points per annum that T Bailey retains from its funds. No one investment house can be “the best” in all investment regions. A multi-manager selects best of breed fund managers in each region. The full-time fund management that a Fof manager provides means the opportunity loss of not replacing a poorly performing fund can be minimised. Poorly performing funds can be replaced-tax efficiently within the Fof structure, adding further savings. The ability to negotiate discounts on the underlying charges within the sub-funds, firstly, from avoiding the initial charge but also from negotiating the underlying annual management charge down as well. Finally, one of the most valuable benefits is active asset allocation which can add considerable value to performance. As the arguments above show, the benefits of Fofs have historically worked out to be greater than the extra layer of fees charged, justifying the existence of the fees and proving the value for money ethos of funds of funds.