A mutual fund NFO or New Fund Offer is when a new mutual fund is launched by a fund house and is offered to the public before it opens up to daily transactions. allowing the firm to raise capital for purchasing securities and investing the initial capital in different investment instrument as per the investment strategy of the fund mentioned in offer document.
Before purchasing the NFO its better to go through the offer document and understand the investment strategy of the new fund. Then it may be studied and compare to your Investment objectives. If it matches to your objective then can be purchased.
There are largely two types of mutual funds – actively managed funds, and passively managed funds, and in most cases any new fund that’s launched has a fund similar to it already available in the market.
In such a situation, it makes more sense to buy into a fund that’s already available, has assets under management, and some track record to go by.
In such a situation, it makes more sense to buy into a fund that’s already available, has assets under management, and some track record to go by.
Conclusion
As various funds are available in market from different AMCs may have comparably same investment strategy, So, you should buy a few mutual funds with limited overlap so that it really gives you the benefit of diversification. With that in mind, evaluate each NFO carefully to see whether it’s worthy of your portfolio or not.
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