Following could be seen as the characteristics of mutual fund NFOs:
NFOs offered by close-ended mutual fund schemes allow investors to invest in new investment strategies that may not be explored by existing mutual fund schemes.
A close-ended mutual fund scheme may launch an NFO when the markets could be at a peak. This might allow investors the flexibility to choose when to invest their funds in the financial markets.
You will be able to purchase the units of the scheme at the new fund offer price which basically is the price per unit that the investor has to pay to invest during the NFO.
NFOs are offered by close-ended funds schemes for a limited period of time, after which investors cannot purchase new units until the scheme reaches its maturity. This might further allow fund managers to select and track the assets (securities or bonds) in a more streamlined manner.
Once the NFO window of open-ended mutual fund schemes closes, any purchase of units can be made at the NAV (net asset value) of that particular scheme. Here new fund offering can help investors purchase units at comparatively nominal cost before the NAV of the fund is determined.
Investments in close-ended funds can only be made through NFOs. The nature of some close-ended funds when it comes to the holding period until maturity can help investors avoid giving in to panic sentiments and might help them receive returns commensurate to the risk involved by the time the scheme matures.
The timing of launch of NFOs is of importance as it may yield varying results depending on the entry point of an investor. The investment objective of the NFO may not always suit one’s investment profile.
It might help investors to understand all the details regarding the NFO of a particular fund by thoroughly studying the scheme information documents (SID). This may further aid investors in making appropriate investment decisions. One can consider investing in NFOs if they believe they are offered something more than the other existing funds and can help fill in the gaps of their investment portfolio.
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Visit www.icicipruamc.com/note to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website http://www.sebi.gov.in/intermediaries.html. For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints on https://scores.gov.in if they are unsatisfied with the resolutions given by AMCs. SCORES portal facilitates you to lodge your complaint online with SEBI and subsequently view its status.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.