FoFs are relatively new instruments in the Indian asset management business, and the total funds allocated to these funds add up to less than Rs1,600 crore (as against the total assets under management (AuM) of Rs2,88,500 crore).

FoFs invest their corpus in a plethora of funds, and are hugely popular in developed markets. In India, just eight of the 30 asset management companies offer FoFs.

OptiMix's fourth FoF, the three-year close-end Dynamic Multi Manager, will invest in equity, debt and liquid funds, but not in parent ING Vysya Mutual Fund schemes. The fund also plans to launch the OptiMix Active Debt Multi Manager – to be invested only in debt funds – shortly.

According to an OptiMix spokesman, 'multi-manager' is the fastest growing investment phenomenon in the world today. Multi-manager AUMs topped $1.2 trillion in 2005, recording a 30 per cent growth rate. Multi-manager AUMs have been growing at a compounded annual growth rate (CAGR) of over 18 per cent, as against just five per cent of the mutual fund industry.

OptiMix invests its multi-manager funds in best-of-breed mutual schemes of 10 asset management companies. Analysts have described the performance of OptiMix schemes as 'middling.'