As the popularity of mutual funds has increased, so has the number of fund houses or AMCs (Asset Management Companies) in India.Many AMCs have introduced numerous NFOs in recent years and continue to do so.An NFO’s purpose is to raise enough initial capital so that the fund manager of a mutual fund scheme may design a portfolio based on the scheme’s investment objectives.The goal of any equity NFO is to invest in good companies’ stock for long-term capital gains.
The above-mentioned NFOs are was recently launched by their respective AMCs.These NFOs are used by the respective AMC to raise funds from the public to buy market instruments such as equity shares, bonds, and so on.
If you are thinking about investing in these NFOs you should understand these NFOs first.NFOs are new to the market, they are less costly than existing listed funds.It is vital to conduct a background check on the fund house or AMC before investing in an NFO.
Check to see if the fund business has a long experience in the mutual fund sector.
Several investors, particularly first-time or new investors, have been found to mistake mutual fund NFOs with IPOsThey believe that once NFOs are listed, they would be able to make a lot of money quickly! They are, nevertheless, comparable to initial public offerings (IPOs), in which the general public can purchase shares before they are listed on a stock exchange.It is quite different from IPOs.As NFOs are different from IPOs one should do check fund objective, minimum subscription amount, the theme of new fund offer, returns, risk factors, and other things such as cost of investment, and investment horizon.