NFO or new fund offer refers to a new mutual fund scheme for the public in the financial markets with an aim of first-time subscription. In other words, a new mutual fund scheme based on a new investment strategy is offered to investors for a limited period of time. Asset management companies (AMCs) offer NFOs as new mutual fund products which are not previously present as part of the product basket. NFOs are offered for both close-ended and open-ended mutual fund schemes. In case of the former, investors cannot invest once the NFO period gets over and are required to stay invested until the maturity period is over; whereas the latter can allow individuals to invest in the units of the scheme when it reopens for subscription. Investing in NFO depends on factors like the risk investor is willing to take, and the value proposition offered.
Following could be seen as the characteristics of mutual fund NFOs:
It might help investors to understand all the details regarding the NFO of a particular fund by thoroughly studying the scheme information documents (SID). This may further aid investors in making appropriate investment decisions. One can consider investing in NFOs if they believe they are offered something more than the other existing funds and can help fill in the gaps of their investment portfolio.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully..
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