Have a Question ?

NFOs (New Fund Offers) are investment opportunities where AMCs launch new mutual fund schemes. Investors can buy units at a fixed price, usually ₹10 per unit, before the fund gets listed on the stock exchange.

Asset Management Companies (AMCs) launch NFOs to raise capital from investors for new mutual fund schemes. This allows them to invest in various securities like stocks, bonds, or other assets, helping expand their portfolio offerings and meet specific investment objectives.

The working procedure of an NFO is similar to that of IPO. As in the case of an IPO, a company takes out them with an aim to raise funds to conduct business. Here, a mutual fund house takes out an NFO to raise funds with an aim to generate in stocks, commodities, currency as well as bonds.

An Equity IPO and an NFO differ mainly in their nature and investment approach. In an Equity IPO, investors buy shares in a company, becoming shareholders and directly exposed to the company’s performance and market risks. In contrast, an NFO involves investing in a new mutual fund scheme where investors buy units of the fund, which in turn invests in a diversified portfolio of assets. While an IPO offers direct ownership in a company, an NFO provides indirect exposure to a range of assets managed by professionals, spreading the risk across multiple investments.

Investing in NFOs offers several benefits:

1. Early Entry Advantage: NFOs allow investors to buy units at the initial offering price, often ₹10 per unit, which could provide potential for future growth.
2. Diversification: NFOs typically invest in a variety of assets, helping spread risk across different securities like stocks, bonds, or other investments.
3. New Opportunities: NFOs offer access to new investment strategies or sectors that might not be available in existing mutual fund schemes.
4. Professional Management: Investments in NFOs are managed by experienced fund managers, providing expert handling of the portfolio.
5. Potential for High Returns: If the NFO is aligned with market trends or invests in emerging sectors, it could offer higher returns compared to established funds.

Before investing in an NFO, consider the following factors:

1. Investment Objective: Understand the fund's goal and ensure it aligns with your financial objectives.
2. Fund Manager's Track Record: Check the experience and performance history of the fund manager.
3. Asset Allocation: Review how the NFO plans to distribute investments across different assets like stocks, bonds, or sectors.
4. Risk Level: Assess the risk associated with the NFO based on its investment strategy and underlying assets.
5. Expense Ratio: Compare the expense ratio with other similar funds to ensure it's reasonable.
6. Fund’s Performance Potential: Research market trends and how the fund's strategy might perform in the current economic environment.
7. Exit Load and Lock-In Period: Check if there are any exit loads or lock-in periods that could affect your liquidity.

Certain special closed-end products are available only via NFOs. This includes Fixed Maturity Plans (FMP) as well as gold or silver ETFs.

MySIPonline has selectively brought you the list of the best NFOs from more than 40 fund houses in the nation. These funds are selected on the basis of the research of the experts, past performances, current market scenarios, and their ability to create wealth over a period of years.