Explainer: What is a mutual fund NFO? What are key considerations before investing in NFO?

economictimes.indiatimes.com:

New Fund Offer (NFO) is the initial subscription period when a mutual fund is launched. During this time, investors can purchase units of the mutual fund at a set price, usually Rs 10 per unit. NFOs are a way for asset management companies (AMCs) to raise capital for investing in the market based on the specific strategy or theme of the fund. Once the NFO period ends, the mutual fund units can be purchased at the prevailing Net Asset Value (NAV) in the open market.

New fund offers (NFO) in mutual funds is similar to initial public offering (IPO) where a company before launching its share on the stock exchange offers the shares to the investors for subscription. In a similar manner, before launching the fund officially in the market the mutual fund houses offer the units so that investors are able to make an investment in that particular fund.

NFOs can be of different types, such as equity funds, debt funds, hybrid funds, or thematic funds, and may come with unique features or investment themes that differentiate them from existing funds. For investors, NFOs provide an opportunity to enter a fund at its inception and potentially benefit from its growth over time.

Best MF to invest

Looking for the best mutual funds to invest? Here are our recommendations.

Also Read | Equity oriented hybrid MFs offer up to 5% return in August

Key considerations before investing in an NFO

1. Fund objective and strategy: Before investing in an NFO, it's crucial to understand the fund's objective and investment strategy. Is