NFO in Mutual Funds: What Is It?
A new fund offer, or NFO, is what mutual funds stand for. There is a new mutual fund plan that has started. The general public is invited to subscribe to the units of a newly introduced mutual fund scheme through NFO by the Asset Management Company or fund house.
The NFO contains information about the plan, the type of securities to be purchased, the fund manager, etc. Investors can purchase mutual units in this offer for an average of ₹10 each. Following its debut, the NFO is traded on the market in accordance with the NAV.
Mutual Funds’ NFO Process
Now that you have a basic understanding of NFO, let’s examine the NFO procedure in mutual funds:
1. NFO refers to the introduction of a new mutual fund plan by an AMC or fund house.
2. During this time, investors may subscribe for units at the price of the initial offer. The cost per unit is extremely low, at just ₹10.
3. Investors can use the exchange to redeem their units once the NFO has ended. Maybe even more units can be purchased by them. These exchanges take place at the scheme’s current NAV.
4. Investing the funds obtained through NFO in different assets based on the goal is handled by the fund manager.
Is Investing in NFO Mutual Funds a Good Idea?
It is up to the investor to decide whether or not to invest in NFO. NFO can be a smart choice if you’re willing to take chances and invest in something different.
It is advantageous for individuals who wish to benefit from long-term profits as well. These investors have access to closed-end funds.
To make an investing decision, you must consider your risk tolerance and overall investment goals.