New Funds Offer (NFO)Does the glamor of stock market arouse the investor in you? Well, there is no doubt to the fact that being mindful and prudent in this industry could make investors huge gains. However, unexpected losses could not be denied becau

Does the glamor of the stock market arouse the investor in you? Well, there is no doubt to the fact that being mindful and prudent in this industry could make investors huge gains. However, unexpected losses could not be denied because risks are always uncertain. As an alien to this industry, you would want to invest your sweat earned savings into something with minimum risk, and high yield on returns.

           If you are a cautious investor, you would look for a lucrative investment opportunity at cheaper rates. Here’s when New Funds Offer (NFO), comes to your rescue.

  So, what are NFO’s actually?

An Asset Management Company (AMC), is a firm that collects funds from a large group of independent investors, often termed as pooled funds and invests the same in a variety of securities such as stocks, bonds, real estate, and more. When these AMC’s launch a new fund for subscription to the public for purchasing securities, the funds are called. According to the guidelines of SEBI, an NFO can be open for a maximum of 30 days. In the NFO period, investors can buy units of funds at the offer price, which is usually Rs 10. Mutual funds are the most common NFO’s

   NFO’s can be both open-ended and close-ended. Open end funds do not limit their no. of shares and could be withdrawn at any time after NFO closes. On the other hand, closed end funds only issue a specified no. of shares during NFO, and investors could not withdraw their money before the pre-decided maturity period.

       There are many AMC companies in India like HDFC, ICICI, Franklin, and others that issue NFO’s to the public.

      There are many benefits for investors to invest in these NFO’S –

• The cost of investment is lower than the counterparts as the NAV is priced at Rs 10 per unit during the subscription period and is an ideal option for people looking for cheaper options with prospects of good returns.


• They provide diversification in an investment portfolio as the investment companies do not pull all eggs in one basket therefore investing in a variety of securities. The loss from one company would not risk the investor as it could be balanced or outweighed by the gain from other companies.


• These NFO’s allow investors to invest in funds relating to a specific theme. Therefore, these funds provide the opportunity for exposure to a new class of innovative investments.


• In the case of open-ended funds, there is instant liquidity as unitholders could purchase or sell their units at any time. This provides them to average out their investments with the rise or fall in the unit price by fluctuations in NAV.

• It is advisable to read the product-related terms and conditions before making any investment.

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                                                            Aadhya-Jain