New Fund Offerings

What is New fund Offer?

New fund Offer (NFO) is the process by which a mutual fund company offers its new fund to investors for the first time. An NFO is open for a limited period of time, typically 30 days. During this time, investors can subscribe to the NFO of the respective AMC.

Once the NFO closes, the fund company will start investing the money that it has raised from investors. The fund company will then track the performance of the investments and distribute the returns to investors.

There are a few things to keep in mind when investing in an NFO.

- NFO is often riskier than established funds. This is because the fund manager has less time to track the performance of the investments and make changes to the portfolio if necessary.

- NFO often have high Expense Ratio. This is because the fund company must cover the costs of marketing and distributing the fund.

Understanding new fund offering

Overall, NFO can be a good way to invest in new investment ideas. Before you start investing here are some of the factors to consider while investing in an NFO:

- The fund's objective: What is the fund's investment objective? Is it to generate income or capital appreciation?

- The fund's management team: Who are the fund managers? What is their experience?

- AMC track record: How has their funds performed in the past?

- The fund's Expense Ratio: How much does the fund charge in fees?

The fund’s past performance is also important, but it may not necessarily be indicative of future results. When investing in an NFO, you should be prepared for the possibility of losing money.

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Why NFO is a good opportunity?

Things to keep in mind before investing in NFO funds

Benefits of NFO schemes

How to invest in NFO?

Frequently asked questions

What is an NFO in mutual funds?

An NFO, or New Fund Offer, is an opening offer by an asset management firm for a scheme. It allows investors to subscribe to the mutual fund scheme during a limited period. The NFO operates like an Initial Public Offering (IPO) in the primary markets, as both aim to raise capital from investors for various activities and projects.

How does a New Fund Offer work?

During an NFO, a mutual fund scheme is made available for investment to accumulate an adequate amount of initial corpus. This corpus is used by the fund manager to build a portfolio based on the investment objectives of the scheme. The fund house launching the NFO needs to comply with SEBI regulations, including the minimum subscription amount and the 20-25 rule, among others. The NFO period typically lasts for 15 days in India. After the NFO period ends, the mutual fund company allots the units of the new scheme within five days.

What are the types of New Fund Offers?

The most common type of New Fund Offerings is for open-end and closed-end mutual funds:

  • Open-end funds
    Announce new shares for purchase on a specified launch day and do not limit the number of shares. They can be bought and sold from a brokerage firm.
  • Closed-end funds
    On the other hand, do not allow NFO investors to exit the fund before maturity, which is typically 3 to 5 years. While open-end funds are more flexible, closed-end funds have lock-in restrictions.

What are the benefits of investing in an NFO?

The benefits of NFO include:

  • Low entry price (Generally ₹10)
  • Innovative scheme options
  • Professionally managed

Are NFOs riskier than existing mutual fund schemes?

NFOs are not inherently riskier than existing mutual fund schemes. The risk associated with an NFO depends on the investment objective, asset allocation, and the underlying securities of the scheme. It is essential to carefully analyze the scheme's investment strategy and risk factors before investing.

What is the minimum investment amount for an NFO?

The minimum investment amount for an NFO varies depending on the mutual fund scheme and regulatory requirements. Fund houses are required to comply with the Securities and Exchange Board of India (SEBI) guidelines, which may specify a minimum subscription amount for different types of schemes.

How NFO is a good opportunity?

An NFO is a safer, less talked about alternative to an IPO. Of course, one could argue that NFOs are less talked about because they are less frequent than IPOs. But in this case, infrequency has no impact on the desirability of the offer. For starters, NFOs are cheap. You can buy a unit during an NFO for ₹10.

Furthermore, historical data suggests that NFOs do have the ability to generate profits after the NFO period, in that, the NAV may rise to a price more than ₹10.

Factors to keep in mind before Investing In an NFO?

Before investing in an NFO, consider the fund house's returns, long-term performance, volatility, and risk management. Analyse the investment objective, potential themes, securities, and type to understand the risks involved, liquidity and lock-in period. Additionally, scrutinize the type of NFO on offer and where it plans to invest its capital.

Disclaimer

Bajaj Finance Limited (“BFL”) is a Non-Banking Financial Company carrying the business of acceptance of deposits, providing lending solutions to Retail & Corporate customers, and is a Corporate agent of various insurance Companies. BFL is also registered with the Association of Mutual Funds in India (“AMFI”) as a distributor of third party Mutual Funds (shortly referred as ‘Mutual Funds’).

BFL does NOT:

(i) provide investment advisory services in any manner or form;

(ii) perform risk profiling of the investor;

(iii) carry customized/personalized suitability assessment;

(iv) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.


In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on ‘As-is’ basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme /Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities. The NAV will inter-alia be exposed to Price / Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other / better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Bajaj Finserv Direct Limited, (“BFDL”), a wholly owned subsidiary of Bajaj Finserv Limited (is a Registered with SEBI as an Investment Advisor with Registration no. INA000016083). BFDL enables resident Indian customers to directly invest in third party mutual funds through its online platform. BFDL entered into a referral arrangement with BFL, whereunder, BFL may, without risk or responsibility on its part, refer the resident Indian customers who are interested in placing their investments in Direct Mutual Funds through BFDL online platform. Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc. and shall also consult their financial advisers, if they are unsure about the suitability of the scheme before investing

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