What is an NFO? Is it a good choice to invest in NFOs?

NFO or New Fund Offer is a new scheme that will be launched by an Asset Management Company in the future. The fund houses launches such funds for accumulating investors’ money that will be used for buying trading instruments. Moreover, NFOs are generally launched by the AMCs when the market is bullish in order to grab the market opportunities. The initial price of an NFO is Rs. 10 which attracts many investors as they wish to take larger number of units at low price. Different experts have different viewpoints on NFOs-

Advantage of investing in NFOs: An investor can buy more number of units at lesser price and can get benefited in the bullish market trend.

Disadvantages of investing in NFOs: The newly launched fund doesn’t have a past performance record which can be used as an important parameter in knowing the recovery rate and future growth prospect.

I haven’t invested in any of the NFOs, so I won’t be able to share my personal experience.

NFOs are the newly launched mutual funds by an AMC. An NFO scheme can be open-ended or close-ended. Such first time subscription offers are open for a particular duration of time only. Having low NAV is the main reason due to which such funds gained more popularity in the recent times. In my experience, an investor, especially those who are new to the mutal fund market, should always stick to the top performing mutual funds