How should investors evaluate an NFO?
mutual fund industry assets, a growing number of investors and the entry of new fund houses have led to several new fund offers (NFOs). Existing fund houses launch new products in categories where they do not have a presence while new ones are keen to enhance their product in themes that they currently find attractive.
WHAT IS A NEW FUND OFFER (NFO)?
A new fund offer (NFO) is a first-time subscription offer for a scheme, from a fund house. The fund house launches an NFO for a category where a product is missing or to increase its basket of offerings. For example, if an AMC does not have a product in the multi-asset category, one which combines different asset classes like equity, gold and fixed income, it will launch an NFO. The NFO is priced at ₹10 per unit. Since the NFO is for an open-ended product, the scheme will reopen for subscriptions once the NFO period ends and allotments will be made at the prevailing net asset value (NAV).
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View Details» <div data-placement=«Mid Article Thumbnails» data-target_type=«mix» data-mode=«thumbnails-mid» style=«min-height:400px; margin-bottom:12px;» class=«wdt-taboola» id=«taboola-mid-article-thumbnails-115469617»>HOW SHOULD INVESTORS EVALUATE AN NFO?
Given the many NFOs launched, it becomes difficult for a retail investor to decide which one to invest in. Since fund houses are allowed one scheme per category and large fund houses have exhausted their regular categories, they are launching NFOs in narrow themes, quantbased schemes, sectoral themes and ETFs. There is high decibel marketing around NFOs. Financial planners say investors should build a long-term portfolio, which includes
