Frequently Asked Questions about New Fund Offers
A New Fund Offer (NFO) is the initial offering of units of a mutual fund scheme to investors
before it is opened for regular subscription. It is akin to an IPO in the mutual fund industry.
During an NFO, a mutual fund house launches a new scheme and invites investors to
subscribe to its units at the offer price, typically for a fixed duration. Once the NFO period
ends, the scheme is opened for regular subscription.
Mutual fund houses launch NFOs to introduce new investment strategies, asset classes, or
themes to the market, and to attract new investors to their funds.
NFOs can be for various types of mutual fund schemes including equity funds, debt funds,
hybrid funds, thematic funds, sectoral funds, and other specialized funds.
Investors can participate in an NFO by subscribing to the units of the new scheme during the
offer period through the designated channels provided by the mutual fund house, such as
online platforms, brokers, or through forms available at mutual fund offices.
Investing in an NFO allows investors to get in at the ground level of a new fund, potentially
benefiting from lower expenses, lower asset size, and the opportunity to invest in unique
strategies or themes.
Before investing in an NFO, investors should consider factors such as the investment
objective of the scheme, the track record of the fund house and fund manager, the expense
ratio, and the risk-return profile of the scheme.
NFO units are allotted to investors based on the subscription amount and the allotment
criteria specified by the mutual fund house. Generally, allotment is done on a first-come,
first-served basis during the NFO period.
Yes, NFO investments are regulated by the Securities and Exchange Board of India (SEBI),
which sets guidelines and regulations governing the launch, subscription, and operation of
mutual fund schemes, including NFOs.
Yes, Non-Resident Indians (NRIs) can invest in NFOs in India, subject to certain conditions
and compliance with the Foreign Exchange Management Act (FEMA) regulations. They can
invest through the NRI category provided by mutual fund houses for subscription to NFO
units.