What is an NFO?

A New Fund Offer (NFO) is when an asset management company (AMC) launches a new mutual fund for the first time in the market. It is similar to an Initial Public Offering (IPO) in the stock market, where companies issue shares to raise funds. In the case of an NFO, investors can subscribe to the mutual fund at a fixed price, usually ₹10 per unit, for a limited period, generally 10 to 15 days.

Once the NFO period ends, the mutual fund units are allotted to investors, and the fund starts operating. The fund’s performance is then determined by its Net Asset Value (NAV), which fluctuates based on the performance of its underlying assets.

NFOs provide investors with an opportunity to invest in new themes, sectors, or strategies before the fund becomes available in the regular market. However, since they do not have a past performance record, investors need to carefully evaluate their investment potential before subscribing.