Key factors one need to know before investing in NFO


New Fund Offer is just like an IPO that is issued for the first time to the public to invest. Before investing in any of the mutual schemes check the stock investing options, asset allocation strategy of the firm, and an additional previous track record and general details about the fund manager.

In mutual funds, NFO new fund offer document or form is issued by an asset management company where it offers a new mutual fund scheme to the investor. some of the key points to be known before investing in any NFO.

Difference between NFO and IPO:

There’s always confusion between the NFO and IPO documents. things included in IPO are the objective and the utilization of funds and the financial statement…etc and NFO consists of a scheme of information document and statement of additional information. Scheme of information document provides information regarding the investment objective, asset allocation pattern, and the investment strategy and the statement of additional information as the name tells provides the additional statutory and other information related to AMC.

Key factors to consider:

Track record: track record tells us how the company has been working in the past years and the goodwill of the company which matters a lot. one should always check from how long the company is offering services and additional information about the fund manager who manages the whole pooled amount would make decision making more precise and effective.

The strategy for asset allocation: before investing one needs to pay keen attention to the strategy of how the company is using and allocation the pooled funds by different investors. This helps to find out the minimum and maximum exposure.

Stock selection: the pooled amount is invested in stocks, debts, and other financial securities. so, before investing one needs to check on which stocks the company is investing in and how are the ratios,52 weeks high/lows of that company. There are various approaches like top-down, bottom-down, technical, and fundamental.

Objectives of investment: another main part is to know the main objective of the discussed in the scheme of investment document where the main objective and the aim for the investment are displayed. This part covers how the company will allocate, choose plans based on equity or debt.

 So, it is a very crucial part and the NPO documents roughly consist of 150 pages each even if everything cannot be read and processed one can focus on the main points and can make an effective decision.

Follow and connect with us on Facebook, LinkedIn & Twitter


Please enter your comment!
Please enter your name here