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NFO (New Fund Offer): Meaning, Working, Types and How to Invest?

ఒక కొత్త ఫండ్ ఆఫర్ (NFO) అనేది ఒక అసెట్ మేనేజ్మెంట్ కంపెనీ (AMC) ద్వారా ప్రారంభించబడుతున్న బ్రాండ్-కొత్త మ్యూచువల్ ఫండ్ స్కీం కోసం ప్రవేశ దశ లాంటిది. పెట్టుబడి లక్ష్యం ప్రకారం మార్కెట్‌లో సెక్యూరిటీలను కొనుగోలు చేసే ముందు స్కీం యొక్క AUMని నిర్మించడానికి, ఈ స్కీం యొక్క మొదటి సబ్‌స్క్రైబర్‌గా ఈ స్కీమ్ యూనిట్‌లను కొనుగోలు చేయడానికి AMC మీకు అవకాశాన్ని ఇస్తుంది. NFO వ్యవధిలో సాధారణంగా ₹ 10 NAV వద్ద యూనిట్‌లు విక్రయించబడతాయి.

ఇది ఇలా పనిచేస్తుంది

ఎన్ఎఫ్ఒ లు ఎలా పనిచేస్తాయి?

The window provided to the investors to subscribe to an NFO is limited; hence, the investors can purchase the units in this pre-defined period only. Once the offer period is over, the units of open-ended schemes can be bought like in the case of other mutual fund schemes at Net Asset Value (NAV) i.e. cost per unit of the scheme, prevalent at that point in time. Units of close-ended schemes are available for purchase on the exchange, however, there may be liquidity issues.

ఎన్ఎఫ్ఒ లుగా అందించగల స్కీంల రకాలు -

ఓపెన్-ఎండెడ్ -

These schemes are available for investment and redemption for the investors at any given point in time. After the introductory NFO is withdrawn, the investors are generally free to enter or exit the scheme as per their will and at the applicable NAV and subject to applicable exit load, if any.

క్లోజ్డ్-ఎండెడ్ -

These schemes are introduced to collect a pool of money for investments in securities, post which, the schemes are closed for further transactions i.e. the entry and exit from the scheme are restricted till the maturity period is over. However, these closed-ended schemes are listed on the stock exchanges by the fund houses, and if you want to exit the scheme, you can trade these units on the exchange.

Difference between IPO and NFO

Both Initial Public Offering (IPO) and NFO represent methods of raising capital from investors. However, there are distinct differences between these two concepts.

More About IPO

Here are some key characteristics of an IPO:

1 Company status

An IPO is primarily used by private companies that wish to transition into publicly traded entities. It allows them to raise funds for expansion, debt repayment, etc.

2 Regulatory compliance

Companies planning an IPO in India must comply with the Securities and Exchange Board of India (SEBI) regulations. They must provide detailed financial information, business prospects, and other relevant disclosures to potential investors.

3 Stock exchange listing

After the IPO, the company's shares are listed and traded on recognized stock exchanges. Interested investors can then buy or sell the shares at market price.

More About NFO

An NFO, as defined above, allows the AMC to raise capital from investors and create a new fund with a specific investment objective. Here are some key points about NFO meaning:

1 Mutual fund launch

An NFO in mutual funds is specific to the mutual fund industry. This is how AMCs introduce new mutual fund schemes with distinct investment strategies, asset allocations, or target markets.

2 Investor participation

NFOs invite investors to subscribe to the newly launched mutual fund scheme during the initial subscription period. They can invest in the scheme by purchasing units at its NAV during the NFO period.

3 NAV calculation

Unlike IPOs, where share prices are determined through a book-building process, NFOs offer units at the NAV, which represents the net value of the fund's assets divided by the number of units outstanding.

4 Market trading

After the NFO period ends, the close-ended mutual fund scheme is listed for trading. Investors can buy or sell mutual fund units per their NFO investment objectives.

Advantages and Disadvantages of an NFO

Advantages:

1 Fresh investment opportunity

As per the NFO meaning in mutual funds, it offers investors a chance to invest in a newly launched mutual fund scheme from the very beginning. This allows them to participate in the potential growth of the fund from its inception.

2 Unique investment objectives

NFOs are typically launched with specific investment objectives, strategies, or themes. This allows investors to diversify their investment portfolio or target specific sectors or asset classes.

Disadvantages:

1 Lack of track record

Since NFOs are newly launched, they may not have a track record of performance. Investors have limited historical data to evaluate the fund's performance or assess the competence of the fund manager.

2 Limited information

Compared to existing funds, NFOs may have limited information available for analysis. Investors may have to rely on the fund's investment strategy, disclosures, and the reputation of the AMC to make an informed decision.

3 Potential performance risks

Investing in an NFO involves inherent risks associated with new and untested investment strategies. There is a possibility that the fund may not perform as expected or fail to achieve its stated objectives. Therefore, it is important for investors to assess the risks associated with the NFO before investing carefully.

ఒక ఎన్ఎఫ్ఒ లో పెట్టుబడి పెట్టేటప్పుడు గుర్తుంచుకోవలసిన పనులు -

1.While NFO is an attractive opportunity to discover a new asset class or new investing strategies, and on the other, you do not have a proven long-term past record of the scheme to study to understand how it has performed in different market cycles. (Past performance may or may not be sustained in the future)

2.స్కీమ్ అనేది మార్కెట్లో లైవ్ అయ్యే ముందు ఎన్ఎఫ్ఒ యొక్క మొత్తం సేకరణ జరుగుతుంది కాబట్టి, మార్కెట్ అనుకూలంగా లేకుంటే రెగ్యులేటరీ పరిమితుల్లో ఉన్న నిధులను పట్టుకోవడానికి ఫండ్ మేనేజర్ కొంత వెసులుబాటును కలిగి ఉండవచ్చు. అయితే, ఫండ్ ఇన్వెస్ట్ చేయబోయే నిర్దిష్ట సెక్యూరిటీలు చాలా స్పష్టంగా ఉండకపోవచ్చు, స్కీమ్ ఇన్వెస్ట్‌మెంట్ పోర్ట్‌ఫోలియో గురించి వివరాలను అందించడానికి మీరు వేచి ఉండాల్సి ఉంటుంది.

ఒక ఎన్ఎఫ్ఒ లో యూనిట్‌లు కొనుగోలు చేయడానికి ముందు వేటిని పరిగణించాలి?

థీమ్/పెట్టుబడి వ్యూహం:

స్కీం యొక్క థీమ్ మీ స్వంత పెట్టుబడి వ్యూహానికి అనుగుణంగా ఉందో లేదో మీరు తనిఖీ చేయవచ్చు.

ఎన్ఎఫ్ఒ నిష్క్రమణ ఎంపికలు:

In case of open-ended scheme one can exit the scheme whenever required. Few schemes having lock-in period may be an exception like Equity Linked Savings Schemes, you can exit from these schemes any time after the lock-in period is over. In case the exit happens before the exit load period, it may attract the respective exit load .

క్లోజ్-ఎండెడ్ స్కీం విషయంలో, మెచ్యూరిటీ వ్యవధి ముగిసే వరకు ఎవరూ కూడా స్కీం నుండి నిష్క్రమించలేరు. అయితే, ఈ మూసివేయబడిన స్కీంలు ఫండ్ హౌస్‌ల ద్వారా స్టాక్ ఎక్స్చేంజ్‌లలో లిస్ట్ చేయబడ్డాయి, మరియు మీరు ఈ స్కీం నుండి నిష్క్రమించాలనుకుంటే, మీరు ఈ యూనిట్‌లను ఎక్స్చేంజ్‌లో ట్రేడ్ చేయవచ్చు.

కనీస పెట్టుబడి:

ఎన్ఎఫ్ఒ లు వైవిధ్యమైన కనీస పెట్టుబడి మొత్తాలతో వస్తాయి, మీరు వాటిలో పెట్టుబడి పెట్టడానికి నిర్ణయించడానికి ముందు వాటిని తనిఖీ చేయాలనుకుంటున్నారు.

పెట్టుబడి హారిజాన్:

ఆఫర్‌పై ఆధారంగా ఎన్ఎఫ్ఒ స్కీంకు కట్టుబడి ఉండే ముందు, మీ స్వంత పెట్టుబడి హారిజాన్‌ను తనిఖీ చేయవలసిందిగా సలహా ఇవ్వబడుతుంది.

రిస్క్ అప్పిటైట్:

It is advisable to check the asset classes the NFO is looking to invest in, since, those should be in line with your own risk-taking appetite. For example, if you are a relatively conservative investor with a lower risk appetite, then an NFO that invests in small and mid-cap equity securities may not be suitable for you. The Risk o Meter gives a good idea on the risk the fund will be exposed to.

ఎన్ఎఫ్ఒ లలో ఎందుకు పెట్టుబడి పెట్టాలి?

భారతీయ మ్యూచువల్ ఫండ్ మార్కెట్‌కు కొత్త లేదా మీ పెట్టుబడి పోర్ట్‌ఫోలియోకు కొత్తది మరియు మీ రిస్క్ ప్రొఫైల్‌కు సరిపోయే ఒక ఇన్వెస్ట్‌మెంట్ థీమ్/స్ట్రాటెజీని ఎన్ఎఫ్ఒ పరిచయం చేస్తే, అప్పుడు ఒక ఎన్ఎఫ్ఒ లో పెట్టుబడి పెట్టడం సరైన పందెంగా ఉండవచ్చు.

పెట్టుబడిదారులు తమ పన్ను/ఆర్థిక సలహాదారులను పెట్టుబడులు పెట్టే ముందు సంప్రదించవలసిందిగా సలహా ఇవ్వబడుతుంది.

Additional Read:What is Total Expense Ratio ?

తరచుగా అడిగే ప్రశ్నలు

What Is the Meaning of NFO?

MF NFO or New Fund Offering refers to the launch of a new mutual fund scheme by an AMC where investors have the opportunity to invest in the scheme during the initial subscription period.

How Do I Choose an NFO?

When choosing an NFO, you need to consider factors like investment objective, the fund manager’s expertise, the fund house reputation, and the disclosure/transparency of the NFO.



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