What is a New Fund Offer (NFO)?
A New Fund Offer (NFO) is the initial offering of units of a mutual fund scheme to the public for subscription. It is similar to an Initial Public Offering (IPO) in the stock market but pertains to mutual funds. During an NFO, the mutual fund company or Asset Management Company (AMC) issues units of a new scheme and invites investors to subscribe to these units. Investors considering investing in an NFO should carefully evaluate the scheme’s investment objectives, strategy, risks, and potential returns outlined in the offer document.
Key Takeaways:
- An NFO marks the launch of a new mutual fund scheme by an AMC. The scheme may be a new fund altogether or an extension of an existing fund lineup.
- During the NFO period, investors have the opportunity to subscribe to units of the new scheme.
- Depending on the type of scheme, the NFO may offer units at a fixed price (fixed-price NFO) or for a fixed duration (fixed-duration NFO).
Table of Content
- How does an NFO Work?
- Types of New Fund Offer
- How NFO is a Good Opportunity?
- Advantages of NFO
- Disadvantages of NFO
- Important Rules Around NFO
- What Happens After NFO?
- How to Invest in an NFO?
- Things to Keep in Mind Before Investing in NFO Funds
- New Fund Offer (NFO) – FAQs