New fund offer

Key Takeaways

1. A new fund offer or NFO refers to the launch of a new fund by an AMC.
2. An NFO behaves similarly to an initial public offering (IPO) of equity shares by a company.
3. Investors look at NFO as an investment opportunity, because other existing funds’ value is higher than the NFO’s.

A new fund offer or NFO refers to the launch of a new fund by an AMC. The money raised through an NFO is invested by the fund house in the markets, and the units are then issued to the initial investors.

Know more

An NFO behaves similarly to an initial public offering (IPO) of equity shares by a company. Just as new shares of a just-listed company are distributed among investors in an IPO, new units of a new fund are distributed among investors in an NFO.

About NFO

Whenever funds open for a business or an AMC launches new funds with selling purposes, this is known as the new fund offer. The investor can buy funds in the NFO period at net asset value (NAV). The NAV value of a new fund remains fixed for a whole NFO period. The NFO’s function is similar to the IPO’s Initial public offering, which is to raise capital for the company. Initially, the value of NFO funds is fixed at RS. 10. After the expiration of the NFO period, funds are traded according to their net asset value (NAV) in the share market. Mutual funds, open-ended funds, and closed-ended funds are introduced to the investor during the NFO.

Should we invest in an NFO or not?

Through new funds offering organizations aimed at raising capital for the business. Investors look at NFO as an investment opportunity, because other existing funds’ value is higher than the NFO’s. Once the NFO period expires, Investors are able to generate some gain after listing of NFO in the stock exchange.