Mutual fund nfo, What is mutual fund NFO? Find out in detail how to invest in Mutual Fund nfo is safe to invest in current scenario.

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New Delhi: Mutual funds may issue new fund offers (NFOs) from next month. The new fund offers will start after the Association of Mutual Funds in India guarantees to stop using pool accounts completely and the new procedure is implemented. Market regulator SEBI had banned mutual funds from launching new fund offers till July 1 in view of the growing trend of pool accounts. Five fund houses have applied to start new fund offers before the ban expires.

When a property management company launches a new plan, it is called a new fund offer. Fund houses launch NFOs to complement their product basket. NFO has an opening and closing period. Some people think that the IPAO and NFO of the fund house are the same, this is their misconception. The two are as different as day and night. The company raises money from the market through IPOs to expand its business or for other needs. At the same time, the fund house collects money from investors in NFOs and invests it in securities (shares, bonds, gold, etc.).

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Should I invest in NFOs?
Financial advisers say investors should only invest in their portfolio if they feel the need for NFOs. Or maybe there’s a theme they want to focus on. Invest in NFOs only if the NFO is special and fits into your portfolio.

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In addition, most experts believe that if the NFO is attractive, it can be included in its satellite portfolio. The main portfolio should be diversified from equity and debt funds. To achieve financial goals, only 8 to 10 funds should be in the main portfolio of equity, debt and other categories.

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High cost ratio
Each fund has a cost ratio. Funds with small AUM (Asset Under Management) may charge higher fees as per regulatory rules in India. When an NFO is launched, its AUM is usually small. Therefore, its cost is likely to be higher. So it is expensive.

No track record
Since NFO is a new fund, it has no track record, which can be evaluated and formulates investment policy. That’s why most investors look at the fund house’s past performance and invest in its NFO. But this is not the right strategy. It is always profitable to invest in a fund with a strong track record.

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