One stop investment avenue 

Open Demat Account close-announcements
Online Trading Online Mutual Funds Back Office Global Investing Login Wealth Management Self Care

CALL US

+91 22 48934000

Contact Details Locate Branch
NFO-Investment_6077d57691e60y

Companies have a variety of different ways of raising money. For example, IPO (Initial public offerings) is how businesses receive capital from retail investors. On exchanges such as BSE and NSE, the stock is listed after the IPO. The funds raised by the company during the IPO are then used for the growth of the business.

Likewise, they collect capital through NFOs (New Fund Offers) with AMCs (asset management companies). It is through an NFO scheme that new mutual funds come into being. Funds received in the NFO by the AMC are used for securities purchases in compliance with the scheme's mandate. NFO certainly seeks your attention if you are looking to learn more about mutual funds.

What is NFO?

NFO or New Fund Offer is an opening offer by an asset management firm for a scheme. You need to comprehend the basic workings of NFO fully. When a fund is opened on the market, a new fund bid is typically made for the raising of capital for securities. An investor has limited time to subscribe to NFO mutual funds. The NFOs are functional on first-come-first-service. An investor can also opt to invest at an offer price in the mutual fund scheme.

What is NFO in Mutual Funds?

The AMC is laying out an NFO for buying securities to help the company increase its capital. The NFO of mutual funds also operates in the same way as a first public offering (IPO). The new fund offer documents often contain information on the portfolio, such as the company stock to be bought, the securities to be acquired, the fund manager, etc.

An investor can sign up for an NFO in a limited amount of time. You can buy the units at the price of your subscription. The price for the bid is typically Rs.10. Investors can also purchase the fund at a prevailing market price after the offering duration is over. The Net Asset Value (NAV) is the market price of the mutual funds.

Types of NFO:-

Two kinds of new fund offerings are available:

  • Open-ended funds: In an open-ended fund, NFO investors can settle the fund units after the NFO has ended and the scheme units can be bought and sold publicly. There is no set period before your investment has to be made.
  • Close-ended funds: An individual who does not join or edit in the close-ended fund is unable to wait for maturity after the NFO duration. Usually, the maturity period ranges from 3-4 years since the starting date. Investors can also buy and sell the unit of NFO funds theoretically on the stock market, but market liquidity is very limited.

What are the advantages of investing in the NFO?

Here are some of the main advantages of NFO investments:

NAV Gain

NFO investments have the best outcomes of NAV profit. The public opening price of the fund will be higher than the price you invest in during the NFO.

Innovative methods for savings

In India, AMC's investment strategies are becoming revolutionary. With NFOs, you can control creative techniques run by managers of experienced funds.

Fixed benefit for maturity

End of the day NFOs demands investment for a fixed period.

TO CONCLUDE

To sum up, everything that has been stated so far AMCs is more likely to create new funds and often come up with something new. But that doesn't mean that you have to invest in it. The best way to benefit from bull runs or safeguard your savings during the bull period will be a fund that was managed through different market cycles and is supervised by seasoned fund administers.

Related Posts

BLOG

Dec 13 . Mon

Normally when we asked for an invest...

61b72bdcbdb7c.1639394268.SIP_investments_(1)_6072fe75b5885

BLOG

Dec 13 . Mon

An investment pool of debt funds is like a mutual fund or a foreign exchan...

61b733c76494e.1639396295.Debt-funds-investment_(1)_606ddc3b9ba5e

BLOG

Dec 13 . Mon

Are you one of those people who want...

628dd67f9673c.1653462655.ncd-blog

BLOG

Dec 13 . Mon

Long-term capital gains (LTCG) are t...

61b7463ac2725.1639401018.Capital_Gain_Bonds_60579598cfcfc

attention-icon Attention Investors

1) Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. 2) Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. 3) Pay 20% upfront margin of the transaction value to trade in cash market segment.  4)Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.5) Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. 6) For Stock Broking transaction : Prevent unauthorised transactions in your account 7) KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary  8) Update/ confirm your mobile number/email ID with us OR If you wish to change/ modify the current Mobile No. & E-mail ID, you are requested to provide MODIFICATION FORM duly filled in and signed OR If you do not want to provide Mobile No. & E-mail ID, you are requested to send DECLARATION FORM duly filled and signed.  9) Receive information of your transactions directly from exchange on your mobile/email at the end of the day...Issued in the interest of Investors 10) No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remain in investor's account. 11)As per SEBI Circular MIRSD/ SE /Cir-19/2009 dated December 3, 2009 Client transaction account shall be required to do the actual settlement of funds and securities at least once in a Quarter or month.