A brand new fund provide (NFO) is a first-time subscription provide for a brand new scheme that has been launched by an asset administration firm. The fund home can launch an NFO round a theme or just to finish their product basket. As soon as the NFO is over, the fund will reopen for subscription once more and traders have the choice to subscribe on the prevailing internet asset worth (NAV)

Distinction between a mutual fund NFO and an fairness IPO…

An fairness IPO is finished by a single firm, which regularly seeks capital for enlargement or to provide an exit to an present investor. Alternatively, an NFO from a mutual fund collects cash from traders and allocates that to a basket of securities (shares or bonds or authorities securities and so forth), primarily based on a said technique.

Does it make sense for traders to go for a mutual fund NFO?

Each particular person ought to consider their portfolio earlier than including any new scheme. Monetary planners really feel traders ought to spend money on an NFO if it matches of their portfolio, or there’s a theme which could be performed by the brand new fund provide. Buyers ought to keep away from funding in an NFO merely as a result of the NAV begins at Rs 10. Many a time there’s mis-selling by distributors, who examine such schemes to open-end schemes which have greater NAVs, which is incorrect. Monetary planners consider traders ought to want open-ended schemes, which have a very good monitor report. In an present scheme, the portfolio and fund supervisor’s type of investing and previous report could be simply evaluated. In an NFO, the investor solely will get to know later the portfolio and its type of administration.