This New Year, Mutual Funds were busy launching new schemes related to NFO (New Fund Offers), and this scheme is on the floor as the analyst believes that the interest rate cycle is reaching its end so that debt funds would be better in 2023.
NFO mutual funds are significant for retail investors looking to make their money work for them, and this is offered by some of India’s trusted fund managing houses.
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What is NFO (New Fund Offer)?
NFO (New fund offers is the new mutual fund scheme by the Asset Management Company (AMC) that launches the NFO, which means that where people can invest in mutual funds, and their existing mutual funds house is launching that fund for the first time in the market.
The fund managers of NFO mutual funds collect the investment pool from the investors, and in return, they invest in generating assets, stocks, and debt. Equity funds are those in which the person invests in stores, and Debt funds are those in which investors invest by offering debt investments.
NFOs of mutual funds work like the Initial Public Offering (IPO) as the details of the portfolio, shares purchased, securities, and much more. The investor can subscribe to NFO within a limited period and purchase the units at the subscription price of Rs 10; as the offer period is over, the investor can prevail over the market price.
How does NFO work?
NFO can be subscribed to the Rs. 10 and remain active for 30 days.
In ending funds, the investment will focus on managing returns rather than assets. Hence NFO mutual funds should be launching extremely important.
The Indian economy and the debt funds believe that the increase in interest rate will end up the interest rate, but it is not possible it will recover soon.
Types of NFO
There are three types of NFOs (New Fund Offers)
Open-Ended New Fund Offer (NFO): The Open-Ended NFO does not resist the number of shares when the NFO is live; it accumulates an initial corpus to purchase shares for the mutual fund unit. The investors do not have restrictions on purchase and redemption requests. It is managed by the AMC or its associates and does not occur in trade.
Close-Ended New Fund Offer (NFO): Close-ended new fund restricts the number of shares as they issue only a specified number. NFOs are marketed on the trade stock market exchange and are associated with trading sessions. Investors can invest only when the NFO is live, and if the funds get expire, then the investors cannot buy the new units.
Exchange Trade Fund: This fund is also launched in issuing a New Fund Offer (NFO); it is created under the performance of a specific index such as Sensex, Nifty 50, Nifty Next 50, Nifty Bank, etc. In this NFO, the trade and the stock exchange have no buying and redemption restrictions.
List of new NFO’s in January 2023
The NFO’s is getting launch in January 2023 there are follows:
| Name of the Scheme | Category | Opening Date | Closing Date |
| UTI CRISIL SDL Mrty June 2027 Index fund | TMF | 2nd Jan | 9th Jan |
| Tata Nifty G-Sec Dec 2029 Index Fund | TMF | 3rd Jan | 10th Jan |
| ABSL FTP UD (79D) | FMP | 3rd Jan | 3rd Jan |
| Tata Nifty G-Sec Dec 2026 Index | TMF | 4th Jan | 11th Jan |
| Axis CRISIL IBX 5050 Gilt plus SDL Jun 2028 Index | TMF | 5th Jan | 16th Jan |
| HDFC Long Duration Debt | Long Duration Funds | 6th Jan | 17th Jan |
| ABSL FTP UE (1275 D) | FMP | 9th Jan | 11th Jan |
| Trust MF Corporate Bond Fund | – | 9th Jan | 18th Jan |
| HSBC Multicap | Multicap | 10th Jan | 24th Jan |
| ABSL Multi Asset Allocation | MAA | 11th Jan | 25th Jan |
| Baroda BNP Paribas Nifty SDL Dec 2026 Index | TMF | 16th Jan | 23rd Jan |
| Tata Multicap | Multicap | 16th Jan | 30th Jan |
| WhiteOak Capital Balanced Advtg Fund | BAF | 20th Jan
|
3rd Feb |
Emerging trends in NFOs
The NFO will launch 12 new funds in January 2023. They are divided into two categories first consisting of 4 equities based or hybrid funds, and the rest are the debt funds. Debt funds are less risky than the rate of interest or rate of return.
*TMF = Target Maturity Funds, i.e., Open-ended funds with a fixed maturity date (can be bought or sold anytime)
*FMP = Fixed Maturity Plans, i.e., closed-ended funds with a fixed maturity date (can be bought only when launched and sold only when the fund is matured)
As the big funders, SBI FMP 74(1243D) and SBI FMP 75(366D) were open till January 9. UTI CRISIL SDL Mtry June 2027 indx fund was open on January 3rd. The first week of January has seen 6 NFOs open across assets classes. NFOs open in the second week are TATA MF and Aditya Birla Sun Life MF is open in the second week of January. In addition, HSBC mutual fund and Tata Mutual fund are launched in multi-cap funds in the second week of January.
NFOs opening in the third week of January are TATA Multicap, Baroda BNP Paribas Nifty SDL, and White Oak Capital Balanced Advtg Fund.
This Funds will generate a lot of interest because of the fund managing house, and you should know the offer before investing in them. However, as several investors have invested in this track for past years, it is fair to accept the portfolio and understand the change in financial trends.
Conclusion
In this article you have known about the investing in NFO with multiple benefits. As a Invest0r a proper research is very important before investing and understanding NFO. Hence the investors should read the terms and conditions before investing.
Frequently Asked Questions
Q1. How to apply for an NFO in India?
You can apply through the website of NFO India through an online trading account.
Q2. What is the difference between the NFO and IPO?
An NFO is a New fund offer issued by the AMC to raise or launch a new mutual fund category. The company gives an IPO to sell shares to the public to raise capital.
Q3. Is NFO Profitable?
Yes, NFO is profitable; you should research the company and market factors extensively.
Q4. Are NFOs suitable for short-term Investment?
Yes, NFOs are suitable for short-term investment as they have a high potential to give you gains.
Q5. Why invest in NFO?
NFOs are cheaper compared to other funds, available in the market, and give a profit.
Q6. Definition of Mutual Funds.
A mutual fund is a well-organized investment scheme run by an asset that brings together a group of people and invests in stocks, bonds, and money.
